LaFleur Rosaasen formato Seriex

Transcription

LaFleur Rosaasen formato Seriex
6(5,(
FRPHUFLRLQWHUQDFLRQDO
7
KHQHZHUDRIFDUERQ
DFFRXQWLQJLVVXHVDQG
LPSOLFDWLRQVIRU/DWLQ$PHULFDQ
DQG&DULEEHDQH[SRUWV
0DUFHOR/D)OHXU
1HYLQ5RVDDVHQ
'LYLVLRQRI,QWHUQDWLRQDO7UDGHDQG,QWHJUDWLRQ
6DQWLDJR6HSWHPEHU
7KLV GRFXPHQW ZDV SUHSDUHG E\ 0DUFHOR /D)OHXU (FRQRPLF $IIDLUV 2IILFHU RI WKH 'LYLVLRQ RI ,QWHUQDWLRQDO
7UDGHDQG,QWHJUDWLRQRIWKH(FRQRPLF&RPPLVVLRQIRU/DWLQ$PHULFDDQGWKH&DULEEHDQ(&/$&DQG1HYLQ
5RVDDVHQ,QWHUQRIWKH'LYLVLRQRI,QWHUQDWLRQDO7UDGHDQG,QWHJUDWLRQRI(&/$&
7KH YLHZV H[SUHVVHG LQ WKLV GRFXPHQW ZKLFK KDV EHHQ UHSURGXFHG ZLWKRXW IRUPDO HGLWLQJ DUH WKRVH RI WKH
DXWKRUVDQGGRQRWQHFHVVDULO\UHIOHFWWKRVHRIWKH2UJDQL]DWLRQ
8QLWHG1DWLRQVSXEOLFDWLRQ
,661SULQWHGYHUVLRQ;
/&/
&RS\ULJKW‹8QLWHG1DWLRQV6HSWHPEHU$OOULJKWVUHVHUYHG
3ULQWHGLQ8QLWHG1DWLRQV6DQWLDJR&KLOH
0HPEHU6WDWHVDQGWKHLUJRYHUQPHQWDOLQVWLWXWLRQVPD\UHSURGXFHWKLVZRUNZLWKRXWSULRUDXWKRUL]DWLRQEXWDUHUHTXHVWHGWR
PHQWLRQWKHVRXUFHDQGLQIRUPWKH8QLWHG1DWLRQVIRUVXFKUHSURGXFWLRQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
,QGH[
$EVWUDFW
,
,QWURGXFWLRQ
,, 7KHREMHFWLYHRIWUDFNLQJHPLVVLRQVDQGSURGXFWODEHOV
$ &RPSDQ\SURFHVVHVDQGVXSSO\FKDLQPDQDJHPHQW
% &RQVXPHUEHKDYLRXU
8QLQWHQGHGFRQVHTXHQFHV
,,, 1DWLRQDODQGLQWHUQDWLRQDOPHWKRGRORJLHV
IRUWUDFNLQJHPLVVLRQV
$ ,62VWDQGDUGV
% 3$6VWDQGDUG
& %LODQ&DUERQH
' 1HZPHWKRGRORJLHVLQLWLDWLYHVDQGODEHOLQJVFKHPHV
( 2WKHUVWDQGDUGV
) +DUPRQL]LQJPHWKRGRORJLHVDQGVWDQGDUGV
* &DUERQDFFRXQWLQJLQDJULFXOWXUDOJRRGV
,9 &RQIOLFWVDQGFKDOOHQJHV
$ 7UDGHGLYHUVLRQ
% %LDVLQ3&)PHWKRGRORJLHV
& 7KH:72DQGSULYDWHODEHOLQJVFKHPHV
9 ,PSOLFDWLRQVIRU/DWLQ$PHULFDDQGWKH&DULEEHDQ
$ 7UDGHLQJUHHQJRGRVDQGVHUYLFHV,VWKHUH
D³FDUERQGLYLGH´"
% 2SSRUWXQLWLHVLQDQHZHUDRIFDUERQDFFRXQWLQJ
&OLPDWHDLGIRUHPHUJLQJHFRQRPLHV
9, &RQFOXVLRQVDQGUHFRPPHQGDWLRQV
%LEOLRJUDSK\
6HULH&RPHUFLRLQWHUQDFLRQDOLVVXHVSXEOLVKHG
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
7DEOHV
7$%/(
7$%/(
7$%/(
7$%/(
7$%/(
&203$5,6212)(0,66,215$7,26)256(/(&7('352'8&76
&$5%21/$%(/,1*,1,7,$7,9(6%<&28175<
(;325762)(19,5210(17$/*22'6&203$5,621
2)6(/(&7('352326$/6
(;325762)(19,5210(17$/*22'6723(;3257(56
$1',03257(56
&2002135,25,7,(62)$,')2575$'($1'&/,0$7(&+$1*(
),1$1&,1*0(&+$1,606
)LJXUHV
),*85(
),*85(
),*85(
),*85(
),*85(
(0,66,2162)*5((1+286(*$6(6(0%2',(',175$'('352'8&76
/$7,1$0(5,&$$1'7+(&$5,%%($1727$/(;32576
$&&25',1*727(&12/2*,&$/,17(16,7<
(;325762)(19,5210(17$//<6(16,7,9(352'8&76
:25/'6(;325762)(19,5210(17$/*22'6³)5,(1'6´/,67
/$7,1$0(5,&$$1'7+(&$5,%%($1(;325762)
(19,5210(17$/*22'6³)5,(1'6´/,67
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
$EVWUDFW
:KLOHJRYHUQPHQWVQHJRWLDWHDPXOWLODWHUDODJUHHPHQWRQFOLPDWHFKDQJH
SULYDWHLQLWLDWLYHVKDYHPRYHGIRUZDUGWKDWKDYHDQHIIHFWRQWUDGH3ULYDWH
LQLWLDWLYHV KDYH EXLOW XSRQ SUHYLRXV H[SHULHQFH LQ ODEHOLQJ DQG
FHUWLILFDWLRQ WR SURYLGH LQIRUPDWLRQ DERXW WKH HQYLURQPHQWDO LPSDFW RI
JRRGV DQG VHUYLFHV 7KLV LV GHVLJQHG WR LQIRUP FRQVXPHUV DQG WR DOORZ
FRPSDQLHV WR UHGXFH LQHIILFLHQFLHV DQG WKHLU LPSDFW RQ WKH HQYLURQPHQW
7KHVHLQLWLDWLYHVDUHEHLQJVXSSRUWHGE\JRYHUQPHQWOHGHIIRUWVWRGHYHORS
DQG VWDQGDUGL]H PHWKRGV WR PHDVXUH WKH HQYLURQPHQWDO LPSDFW RI JRRGV
DQG VHUYLFHV 7KH GHVLJQ RI WKHVH PHWKRGRORJLHV DQG KRZ WR KDUPRQL]H
WKHPLQWRRQHLQWHUQDWLRQDOVWDQGDUGDUHVLJQLILFDQWRQJRLQJFKDOOHQJHVIRU
WKHJOREDOWUDGLQJV\VWHPDQGZLOOKDYHDQLPSDFWRQH[SRUWVIURP /DWLQ
$PHULFDDQGWKH&DULEEHDQ
,W LV FOHDU WKDW ZKHWKHU WKH LQLWLDWLYH LV OHG E\ JRYHUQPHQWV WKH
SULYDWHVHFWRURUERWKWKHUHJLRQZLOOEHDIIHFWHGE\WKHJURZLQJGHPDQG
IRU GHWDLOHG FDUERQ IRRWSULQW DFFRXQWLQJ LQ PDQ\ DVSHFWV RI HFRQRPLF
DFWLYLW\3ROLF\PDNHUVDQGLQGXVWU\UHSUHVHQWDWLYHVPXVWEHSUHSDUHGIRU
WKHVH QHZ UHTXLUHPHQWV DQG WKHLU LPSOLFDWLRQV IRU H[SRUWV WHFKQLFDO
FDSDFLW\IRUPRQLWRULQJYHULILFDWLRQDQGLPSOHPHQWDWLRQ
7KLV SDSHU IRFXVHV RQ WKH UHFHQW WUHQGV RI SULYDWH DQG XQLODWHUDO
HIIRUWV WR DFFRXQW IRU WKH FDUERQ HPLVVLRQV RI WUDGHG JRRGV ZLWK WKH
REMHFWLYHRILGHQWLI\LQJSRVVLEOHULVNVDQGRSSRUWXQLWLHVIRU/DWLQ$PHULFDQ
DQG&DULEEHDQH[SRUWHUV,WSUHVHQWVDGHVFULSWLRQRIWKHRQJRLQJLQLWLDWLYHV
VWDQGDUGV DQG SURSRVHG OHJLVODWLRQ WKDW DUH UHOHYDQW WR WKH GLVFXVVLRQ ,W
IROORZV WKLV E\ LGHQWLI\LQJ WKH VKRUWIDOOV DQG FKDOOHQJHV RI FDUERQ
IRRWSULQWLQJDQGWKHLPSOLFDWLRQVIRU/DWLQ$PHULFDQDQG&DULEEHDQH[SRUW
FRPSHWLWLYHQHVV )LQDOO\ LW SURYLGHV SROLF\ VXJJHVWLRQV IRU WKH UHJLRQ
DVVXPLQJWKHJURZLQJGHPDQGIRUFDUERQHPLVVLRQVDFFRXQWLQJ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
,
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
,QWURGXFWLRQ
2YHU WKH ODVW GHFDGH HQYLURQPHQWDO VXVWDLQDELOLW\ KDV JDLQHG LPSRUWDQFH
LQ HFRQRPLF DQG SROLWLFDO DJHQGDV SDUWLFXODUO\ LQ OLJKW RI WKH FOLPDWH
FKDQJHSKHQRPHQRQ'HYHORSPHQWVWUDWHJLHVDUHEHLQJFDUHIXOO\UHYLHZHG
WR GHWHUPLQH WKHLU HQYLURQPHQWDO LPSDFW DQG QHZ VWUDWHJLHV DUH EHLQJ
GHYHORSHG WR UHGXFH WKH HPLVVLRQV IRRWSULQW RI LQGXVWULHV VHFWRUV DQG
HQWLUH HFRQRPLHV 7UDGH DGGV DQ H[WUD GLPHQVLRQ RI FRPSOH[LW\ WR WKLV
DOUHDG\IRUPLGDEOHFKDOOHQJHKRZWRHQVXUHWKDWPXOWLODWHUDOQDWLRQDODQG
SULYDWH LQLWLDWLYHV WR UHGXFH HPLVVLRQV GR QRW GLVWRUW IDYRUDEO\ RU
XQIDYRUDEO\DFRPSOH[QHWZRUNRIWUDGLQJUHODWLRQVKLSV
$WWKHPXOWLODWHUDOOHYHOFOLPDWHFKDQJHLVEHLQJDGGUHVVHGXQGHUWKH
8QLWHG1DWLRQV)UDPHZRUN&RQYHQWLRQRQ&OLPDWH&KDQJH81)&&&DQG
LQWKH:RUOG7UDGH2UJDQL]DWLRQ:727KH81)&&&QHJRWLDWLRQVDLPWR
GHILQHQDWLRQDOFRPPLWPHQWVWRUHGXFHJUHHQKRXVHJDV*+*HPLVVLRQVE\
ZKHQWKHILUVWFRPPLWPHQWSHULRGRIWKH.\RWR3URWRFROHQGV
,Q SDUWLFXODU EURDGHU UHGXFWLRQV DUH EHLQJ VRXJKW IURP DOO WKH ODUJHVW
SROOXWHUV XQOLNH WKH .\RWR 3URWRFRO ZKRVH ELQGLQJ FRPPLWPHQWV DSSO\
RQO\ WR WKH LQGXVWULDOL]HG FRXQWULHV 7KH XQGHUO\LQJ LVVXH LV WKH EDODQFH
EHWZHHQ WKH QHHG WR IRVWHU HFRQRPLF JURZWK DQG WKH QHHG WR FDS FDUERQ
GLR[LGH&2HPLVVLRQV*HQHUDOO\VSHDNLQJWKHGLVDJUHHPHQWEHWZHHQWKH
SDUWLFLSDQWV VWHPV IURP WKH IDFW WKDW WKH LQGXVWULDOL]HG FRXQWULHV ZDQW
VLJQLILFDQW UHGXFWLRQ FRPPLWPHQWV IURP DOO WKH PDLQ HPLWWLQJ FRXQWULHV
LQFOXGLQJ WKH HPHUJLQJ HFRQRPLHV ZKHUHDV WKH GHYHORSLQJ FRXQWULHV GR
QRWZDQWWRFXUWDLOWKHLUJURZWKDQGGHYHORSPHQWSRVVLELOLWLHVE\DJUHHLQJWR
VWULQJHQW UHGXFWLRQV 7KH GHYHORSLQJ FRXQWULHV VWUHVV WKDW WKH\ QHHG
WHFKQLFDODQGILQDQFLDODVVLVWDQFHLQRUGHUWRDVVXPHJUHDWHUFRPPLWPHQWV
7KXVIDUWKH2(&'FRXQWULHVDFFRXQWIRURIDOO*+*HPLVVLRQVEXW
HPLVVLRQVIURPGHYHORSLQJFRXQWULHVDUHVWHDGLO\LQFUHDVLQJ%HWZHHQ
DQGWKHYROXPHRI*+*HPLVVLRQVIURP2(&'FRXQWULHVLVSURMHFWHG
WR LQFUHDVH DW DQ DYHUDJH DQQXDO UDWH RI ZKLOH WKDW RI GHYHORSLQJ
FRXQWULHVZLOOULVHDWSHU\HDU
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
7KHLQDELOLW\RIWKH&RSHQKDJHQ6XPPLWWRUHDFKDPXOWLODWHUDODJUHHPHQWRQELQGLQJFXWV
LQ *+* HPLVVLRQV ZDV D VLJQLILFDQW VHWEDFN WR WKH HIIRUWV WR DGGUHVV FOLPDWH FKDQJH 6LQFH WKH
&RSHQKDJHQVXPPLWWKHUHKDYHEHHQDGKRFPHHWLQJVLQ:DVKLQJWRQ'&DQG&RFKDEDPED%ROLYLD
EXWWKHVHKDYHRQO\H[DFHUEDWHGWKHLPSDVVHEHWZHHQGHYHORSHGDQGGHYHORSLQJQDWLRQV,QDGGLWLRQWKH
FRQWLQXLQJ JOREDO HFRQRPLF UHFHVVLRQ DQG KLJK UDWHV RI XQHPSOR\PHQW KDYH PDGH WKH H[SDQVLRQ RI
SURGXFWLRQ SDUDPRXQW IRU QDWLRQDO JRYHUQPHQWV DQG WKLV KDV SHUKDSV GLIIXVHG WKH SROLWLFDO ZLOO WR MRLQ
FOLPDWHFKDQJHLQLWLDWLYHV
$W WKH VDPH WLPH DQG SDUWO\ DV D UHVXOW RI WKH GLIILFXOWLHV LQ UHDFKLQJ DQ LQWHUQDWLRQDO DJUHHPHQW
YDULRXV QDWLRQDO VWDWH DQG PXQLFLSDO JRYHUQPHQWV KDYH PRYHG IRUZDUG ZLWK WKHLU RZQ FOLPDWH FKDQJH
SROLFLHV 7KH 8QLWHG 6WDWHV DQG (XURSHDQ FRXQWULHV DUH DFWLYHO\ H[DPLQLQJ SROLF\ SURSRVDOV WR PLWLJDWH
FDUERQ HPLVVLRQV LQ WKHLU HFRQRPLHV ZKLFK ZRXOG PRVW OLNHO\ LQFOXGH VRPH WUDGHUHODWHG PHDVXUHV
(&/$&+RZHYHUFRQFHUQVUHJDUGLQJFRPSHWLWLYHQHVVDQGFDUERQOHDNDJHKDYHDULVHQDQG
SROLF\PDNHUVDUHORRNLQJIRUZD\VZKHWKHUXQLODWHUDORUWKURXJKFRRSHUDWLRQWRSURWHFWDQGVXSSRUWWKHLU
GRPHVWLFLQGXVWULHV3ROLFLHVWKDWKDYHDQLPSDFWRQWUDGHZLOOQHHGWREHFRPSDWLEOHZLWKH[LVWLQJELODWHUDO
DQGPXOWLODWHUDODJUHHPHQWV)RUH[DPSOHERUGHUDGMXVWPHQWPHDVXUHVGHVLJQHGWRSHQDOL]HSURGXFWVZLWK
DKLJKHQYLURQPHQWDOLPSDFWPD\UXQDIRXORIH[LVWLQJ:72DJUHHPHQWVVHH6HFWLRQ
6RPHSULYDWHLQLWLDWLYHVKDYHKDGJUHDWHUVXFFHVVWKDQPXOWLODWHUDODQGQDWLRQDOLQLWLDWLYHVEHFDXVH
WKH\KDYHQ¶WKDGWRGHDOZLWKFRPSHWLQJLQWHUHVWV3ULYDWHLQLWLDWLYHVKDYHEXLOWXSRQSUHYLRXVH[SHULHQFH
LQ ODEHOLQJ DQG FHUWLILFDWLRQRI JRRGV DQG VHUYLFHV HJRUJDQLF IDLU WUDGH LQ UHVSRQVH WR FRQVXPHUV¶
GHPDQGIRUPRUHLQIRUPDWLRQDERXWWKHVXVWDLQDELOLW\DQGHQYLURQPHQWDOLPSDFWRIWKHLUSXUFKDVHV$W
WKH VDPH WLPH ²DQG SHUKDSV ZLWK D JUHDWHU SRWHQWLDO WR UHGXFH DQWKURSRJHQLF *+* HPLVVLRQV²
FRPSDQLHV DUH DWWHPSWLQJ WR OLPLW WKHLU LPSDFW RQ WKH HQYLURQPHQW KRSLQJ WR LPSURYH WKHLU FRUSRUDWH
LPDJHDQGWRLGHQWLI\LQHIILFLHQFLHVLQWKHLUSURFHVVHVDQGVXSSO\FKDLQV*RYHUQPHQWVDUHDOVRVWDUWLQJ
WRLQFOXGHHQYLURQPHQWDOSHUIRUPDQFHLQWKHLUSURFXUHPHQWUHTXLUHPHQWVDQGLQWKHLURSHUDWLRQDOSODQV
7KHVH LQLWLDWLYHV DUH EHLQJ VXSSRUWHG E\ JRYHUQPHQWOHG HIIRUWV WR GHYHORS DQG VWDQGDUGL]H
PHWKRGV WR PHDVXUH WKH HQYLURQPHQWDO LPSDFW RI JRRGV DQG VHUYLFHV 7KH 8QLWHG .LQJGRP WKH
(XURSHDQ &RPPLVVLRQ DQG WKH ,QWHUQDWLRQDO 2UJDQL]DWLRQ IRU 6WDQGDUGL]DWLRQ ,62 DUH DFWLYHO\
GHYHORSLQJPHWKRGRORJLHVDQGVWDQGDUGVWRPHDVXUHWKH3URGXFW&DUERQ)RRWSULQW3&)RIJRRGVDQG
VHUYLFHV DV ZHOO DV RWKHU PHDVXUHV RI LPSRUWDQFH WR FOLPDWH FKDQJH 0DQ\ QDWLRQDO DQG SULYDWH
LQLWLDWLYHVDUHXWLOL]LQJWKHVHPHWKRGRORJLHVWRGHVLJQSURJUDPVDQGEXLOGWKHLUFDSDFLW\WRDFFRXQWIRU
WKH FDUERQ IRRWSULQW RI WKHLU HFRQRPLHV DQG LQGXVWULHV7KHGHVLJQRI WKHVH PHWKRGRORJLHV DQG KRZ WR
KDUPRQL]H WKHP LQWR RQH LQWHUQDWLRQDO VWDQGDUG DUH VLJQLILFDQW RQJRLQJ FKDOOHQJHV WKDW ZLOO KDYH DQ
LPSDFWRQ/DWLQ$PHULFDQDQGWKH&DULEEHDQH[SRUWV
7KH UHJLRQ ZLOO EH DIIHFWHG E\ WKH JURZLQJ GHPDQG IRU FDUERQ IRRWSULQWLQJ DQG VXVWDLQDELOLW\
UHTXLUHPHQWV LQ WKH LQGXVWULDOL]HG ZRUOG LQ D QXPEHU RI ZD\V (YHQWXDO QDWLRQDO HPLVVLRQV UHGXFWLRQ
FRPPLWPHQWV QHJRWLDWHG LQ D SRVW.\RWR DJUHHPHQW ZLOO UHTXLUH D GHWDLOHG DFFRXQWLQJ RI HDFK
HFRQRP\¶V *+* HPLVVLRQV ,Q DGGLWLRQ D JURZLQJ QXPEHU RI SULYDWH UHTXLUHPHQWV WR GRFXPHQW WKH
FDUERQIRRWSULQWDQGVXVWDLQDELOLW\RIWKHUHJLRQ¶VH[SRUWVZLOODOVRUHTXLUHGHWDLOHGDFFRXQWLQJ([SRUWV
IURPWKHUHJLRQZLOOHLWKHUJDLQRUORVHFRPSHWLWLYHQHVVGHSHQGLQJRQWKHLUFDUERQIRRWSULQW7KHFKRLFH
RIPHWKRGRORJ\IRUERWKWKHVHLQVWDQFHVZLOOEHRIJUHDWVLJQLILFDQFHWRHDFKFRXQWU\
7KLVSDSHUIRFXVHVRQWKHUHFHQWWUHQGVRISULYDWHDQGXQLODWHUDOHIIRUWVWRDFFRXQWIRUWKHFDUERQ
HPLVVLRQV RI WUDGHG JRRGV ZLWK WKH REMHFWLYH RI LGHQWLI\LQJ SRVVLEOH ULVNV DQG RSSRUWXQLWLHV IRU /DWLQ
$PHULFDQ DQG &DULEEHDQ H[SRUWHUV 7KLV SDSHU ZLOO SUHVHQW WKH YDULRXV LQLWLDWLYHV VWDQGDUGV DQG
SURSRVHG OHJLVODWLRQ WKDW DUH UHOHYDQW WR WKH GLVFXVVLRQ ,W ZLOO SUHVHQW VRPH RI WKH VKRUWIDOOV DQG
FKDOOHQJHV RI FDUERQ IRRWSULQWLQJ GLVFXVV WKH LPSOLFDWLRQV IRU /DWLQ $PHULFDQ DQG &DULEEHDQ H[SRUWV
DQGSURYLGHSROLF\VXJJHVWLRQVIRUWKHUHJLRQ
'HVSLWHWKHGLVWLQFWLRQEHWZHHQVKRUWWHUPDGMXVWPHQWSROLFLHVQHHGHGWRVWLPXODWHWKHHFRQRP\DQGORQJHUWHUPSROLFLHVWRUHVWUXFWXUHD
FRXQWU\WRZDUGVDOHVVFDUERQLQWHQVLYHSURGXFWLRQEDVHSROLWLFDOO\WKHDUJXPHQWVIRURQHRIWHQLQWHUIHUHZLWKWKHRWKHU
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
,, 7KHREMHFWLYHRIWUDFNLQJ
HPLVVLRQVDQGSURGXFWODEHOV
$VWKHLVVXHRIFOLPDWHFKDQJHKDVJDLQHGSURPLQHQFHFRQVXPHUVLQKLJK
LQFRPH FRXQWULHV DUH LQFUHDVLQJO\ PRQLWRULQJ WKH LPSDFW RI WKHLU
SXUFKDVHV RQ WKH HQYLURQPHQW &XVWRPHUV DUH GHPDQGLQJ PRUH
LQIRUPDWLRQRQWKHHQYLURQPHQWDOLPSDFWRIWKHJRRGVWKH\EX\LQFOXGLQJ
RQ WKH SURGXFWLRQ SURFHVV DQG WKH HPLVVLRQV UHODWHG WR WUDQVSRUWLQJ
SURGXFWVWRWKHSRLQWRIVDOHDOVRNQRZQDVIRRGPLOHV$WWKHVDPHWLPH
FRPSDQLHV VHH YDOXH LQ LPSURYLQJ WKHLU HQYLURQPHQWDO SURILOH DQG DUH
VWHSSLQJXSHIIRUWVWRLGHQWLI\LQHIILFLHQFLHV
$V D UHVXOW PDQ\ LQLWLDWLYHV VRPH OHG E\ WKH SULYDWH VHFWRU DQG
RWKHUV E\ JRYHUQPHQWV KDYH HPHUJHG WKDW DWWHPSW WR PHDVXUH WKH
HQYLURQPHQWDOVXVWDLQDELOLW\RIJRRGVDQGVHUYLFHV%\RQHDFFRXQWWKHUH
DUHRYHUGLIIHUHQWODEHOVFRYHULQJLQGXVWU\VHFWRUVLQFRXQWULHV
:RUOG5HVRXUFHV,QVWLWXWH DQG%LJ5RRP,QF7KHVHUDQJHIURP
VLPSOH ODEHOV WKDW GHWDLO KRZ IDU D VXSHUPDUNHW SURGXFW KDV WUDYHOOHG WR
PRUH FRPSOH[ PHWKRGV WKDW FDOFXODWH WKH FDUERQ HPLVVLRQV RI D SURGXFW
GXULQJ LWV HQWLUH OLIH F\FOH XVLQJ FDUERQ UHJLVWULHV DQG SXEOLVKHG
DFFRXQWLQJVWDQGDUGV7KHVHIUDJPHQWHGDQGLQFRPSDWLEOHPHWKRGRORJLHV
KDYH OHG WR DGGLWLRQDO EXUGHQV RQ FRPSDQLHV FRQIXVLQJ LQIRUPDWLRQ IRU
FRQVXPHUV DQG SRWHQWLDO WUDGH GLYHUVLRQ HIIHFWV IRU PRUH RQ HIIRUWV WR
GHYHORS VWDQGDUG DQG KDUPRQL]HG PHWKRGRORJLHV IRU PHDVXULQJ DQG
ODEHOLQJSURGXFWVVHH6HFWLRQEHORZ
+RZHYHU WKH EHQHILWV RI KDYLQJ PRUH DQG LPSURYHG LQIRUPDWLRQ
DERXWWKHHQYLURQPHQWDOLPSDFWRIJRRGVDQGVHUYLFHVFDQEHVLJQLILFDQW
• *RYHUQPHQWV ZLOO EHQHILW IURP D EHWWHULQIRUPHG SRSXODWLRQ
ZLWK JUHDWHU DZDUHQHVV RI WKH LPSDFW RI WKHLU GHFLVLRQV RQ WKH
HQYLURQPHQW 7KLV FDQ KHOS LQ GHVLJQLQJ DQG LPSOHPHQWLQJ
UHIRUPV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
• :LGHVSUHDGFDUERQDFFRXQWLQJPD\JHQHUDWHDVLJQLILFDQWDPRXQWRIGDWDWKDWFDQEHXVHGWR
LQIRUPSROLF\SDUWLFXODUO\LQOLJKWRIDQ\HPLVVLRQVUHGXFWLRQFRPPLWPHQWV
• &RQVXPHUV ZLWK HQYLURQPHQWDO FRQFHUQV ZLOO KDYH DGGLWLRQDO UHVRXUFHV ZLWK ZKLFK WR PDNH
LQIRUPHGFKRLFHV
• 3URGXFHUV DQG UHWDLOHUV ZLOO EH DEOH WR EHWWHU SULFH JRRGV DQG VHUYLFHV DFFRUGLQJ WR WKHLU
HQYLURQPHQWDOLPSDFWKHOSLQJDOORFDWHUHVRXUFHVWRZDUGDJUHHQHUHFRQRP\
• 3URGXFHUV DQG UHWDLOHUV ZLOO EH DEOH WR LGHQWLI\ LQHIILFLHQFLHV LQ WKHLU VXSSO\ FKDLQ DQG
SURFHVVHV KHOSLQJ UHGXFH FRVWV DQG FUHDWLQJ D QHZ VWDQGDUG RI VXVWDLQDELOLW\ WKURXJKRXW WKH
SURGXFWLRQSURFHVV0DF*UHJRU
$
&RPSDQ\SURFHVVHVDQGVXSSO\FKDLQPDQDJHPHQW
$OWKRXJK SURGXFWODEHOLQJ VFKHPHV DUH PRVWO\ FXVWRPHURULHQWHG WKH LQIRUPDWLRQ JHQHUDWHG E\
PHDVXULQJWKH3URGXFW&DUERQ)RRWSULQW3&)RIJRRGVDQGVHUYLFHV²DVZHOODVWKHLPSDFWRQZDWHU
WDEOHV VXVWDLQDELOLW\ DQG RWKHUV² LV EHQHILFLDO WR SURGXFHUV DQG GLVWULEXWRUV &RPSDQLHV DUH DEOH WR
WUDFNDQGUHGXFHWKHLUHPLVVLRQVGLIIHUHQWLDWHWKHLUSURGXFWVFDSWXUHHQYLURQPHQWDOO\VHQVLWLYHPDUNHWV
DQGFUDIWDQLPDJHDVDVXVWDLQDEOHRUµJUHHQ¶EXVLQHVV)RUPDQ\ILUPVDFKLHYLQJFDUERQQHXWUDOLW\RU
KDYLQJ ]HUR HPLVVLRQV LV RIWHQ D UHVXOW RI FRUSRUDWH VRFLDO UHVSRQVLELOLW\ SROLFLHV DV ZHOO DV FXVWRPHU
GHPDQGV 7R DFKLHYH WKLV FRPSDQLHV PD\ SXUFKDVH FDUERQ RIIVHWV WR QHXWUDOL]H WKHLU VXSSO\ FKDLQ¶V
LPSDFW RQ WKH HQYLURQPHQW WKLV UHTXLUHV D SURSHU DFFRXQWLQJ RI WKH HQYLURQPHQWDO LPSDFW RI WKHLU
RSHUDWLRQV 7KH ILUPV WKDW XVH HQYLURQPHQWDO ODEHOV UDQJH IURP VPDOO LQQRYDWLYH ILUPV OLNH 3DWDJRQLD
DQG7LPEHUODQGWRPXOWLQDWLRQDOJLDQWVVXFKDV7HVFR:DO0DUWDQG)UDQFH¶VODUJHVWUHWDLOHU&DVLQR
3DXO%UHQWRQ*DUHWK(GZDUGV-RQHVDQG0)-HQVHQ%DOO
%
&RQVXPHUEHKDYLRU
7KH HQYLURQPHQWDO SXUSRVH RI ODEHOV LV WR DIIHFW FXVWRPHU EHKDYLRU DQG SXUFKDVLQJ GHFLVLRQV WKHUHE\
UHGXFLQJ WKH GHPDQG IRU JRRGV DQG VHUYLFHV WKDW KDYH D UHODWLYHO\ KLJKHU LPSDFW RQ WKH HQYLURQPHQW $
QXPEHURIODEHOVDOUHDG\H[LVWWKDWSURYLGHFXVWRPHUVZLWKLQIRUPDWLRQDERXWSURGXFWLRQSURFHVVHVWKHPRVW
SRSXODURIZKLFKDUHWKH2UJDQLFDQG)DLU7UDGHODEHOV+RZHYHULQPDQ\FRXQWULHVODEHOVH[LVWWRLGHQWLI\
SURGXFWVWKDWPHHWUHTXLUHPHQWVIRUHQHUJ\HIILFLHQF\UHF\FOHGFRQWHQWZLOGOLIHSUHVHUYDWLRQDQGRWKHUV
(PSLULFDOHYLGHQFHVKRZVWKDWHFRODEHOLQJFDQDOWHUFRQVXPHUEHKDYLRU,QDVWXG\RIFRQVXPHUV¶
UHDFWLRQVWRGROSKLQVDIHODEHOVRQFDQQHGWXQDFRQVXPHUVUHVSRQGHGSRVLWLYHO\WRLQIRUPDWLRQRQHFR
ODEHOV DERXW WKH SURGXFWLRQ SURFHVV 7HLVO 5RH DQG +LFNV $OWKRXJK WKLV LV HQFRXUDJLQJ WKH
VWXG\GLGQRWSUHVHQWDQ\HYLGHQFHDVWRKRZJHQHUDOWKLVUHDFWLRQPLJKWEHDFURVVSURGXFWW\SHVVXFKDV
IRRGHOHFWURQLFVRULQIHULRUJRRGVRUDFURVVLQFRPHOHYHOV,QDVWXG\RI86FRQVXPHUVRYHUD
WKLUGRIWKRVHVXUYH\HGZHUHZLOOLQJWRSD\DSUHPLXPIRUHFRIULHQGO\SURGXFWV0LQWHO
$QRWKHU VWXG\ ORRNHG DW VSHFLILF SURGXFW W\SHV DQG IRXQG WKDW LQ WKH FDVH RI WHOHYLVLRQV PRUH
WKDQ KDOI ZRXOG EH ZLOOLQJ WR SD\ D SUHPLXP IRU D SURGXFW ZLWK D ORZHU HQYLURQPHQWDO LPSDFW
&RQVXPHU (OHFWURQLFV $VVRFLDWLRQ $ VWXG\ RI FRQVXPHUV LQ WKH 8QLWHG .LQJGRP DOVR IRXQG
HYLGHQFHWKDWFRQVXPHUVFRQVLGHUWKHHQYLURQPHQWDOLPSDFWRISURGXFWVLQWKHLUGHFLVLRQVZLWKRI
WKRVH VXUYH\HG ZDQWLQJ PRUH LQIRUPDWLRQ RQ FRPSDQLHV¶ HIIRUWV WR UHGXFH WKH HPLVVLRQV RI WKHLU
SURGXFWVDQGSURFHVVHV7KHVDPHVWXG\DOVRIRXQGWKDWPRVWFRQVXPHUVGRQRWIHHOWKH\KDYHVXIILFLHQW
LQIRUPDWLRQZLWKZKLFKWRLGHQWLI\FRPSDQLHVWKDWDUHWDNLQJSURSHUDFWLRQ&DUERQ7UXVW
8QLQWHQGHGFRQVHTXHQFHV
'HVSLWHWKHFOHDUGHVLUHIRUFXVWRPHUVWRIDFWRUHQYLURQPHQWDOFRQFHUQVLQWRWKHLUSXUFKDVLQJGHFLVLRQVHFR
ODEHOVFDQKDYHXQLQWHQGHGFRQVHTXHQFHV6RPHH[DPSOHVRIWKLVDUHWKHXVHRIWKH)RRG0LOHVODEHODQGWKH
$LU)UHLJKWHGODEHO7KHVHIRFXVRQDVLQJOHLVVXHLQWKHVHFDVHVWUDQVSRUWGLVWDQFHDQGPHWKRGWKDWPD\QRW
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
EHWKHPRVWLPSRUWDQWGHWHUPLQDQWRIWKHSURGXFW¶VHPLVVLRQV7KHSURGXFWLRQPHWKRGVIRUDORFDOO\SURGXFHG
JRRGPD\JHQHUDWHPRUHHPLVVLRQVHYHQDIWHUFRQVLGHULQJWKHUHGXFWLRQLQWUDQVSRUWHPLVVLRQV
7KH FRQFHSW RI IRRG PLOHV KDV H[LVWHG VLQFH WKH V LW WUDFNV WKH GLVWDQFH WUDYHOOHG E\ IRRG
IURPWKHIDUPJDWHWRWKHFRQVXPHU¶VWDEOH7KHLGHDKDVEHHQHQGRUVHGDQGDGRSWHGE\PDQ\SURGXFHU
DQGFRQVXPHUJURXSV2WKHUFRQFHSWVVXFKDVEX\LQJORFDODQGWKHPLOHGLHWKDYHHPHUJHGIURP
IRRG PLOHV DV D ZD\ WR OLPLW DQ LQGLYLGXDO¶V HPLVVLRQV DQG DLG LQ WKH EDWWOH DJDLQVW FOLPDWH FKDQJH
$OWKRXJK WKHVH LQLWLDWLYHV DOORZ FRQVXPHUV WR UHFRQQHFW ZLWK ZKHUH WKHLU IRRG FRPHV IURP DQG KHOS
VPDOO IDUPHUV DQG WKH VXUURXQGLQJ ORFDO FRPPXQLWLHV IRRG PLOHV GR QRW SURSHUO\ JDXJH D SURGXFW¶V
UHODWLYHHQYLURQPHQWDOLPSDFWEHFDXVHWKH\GRQRWWDNHLQWRFRQVLGHUDWLRQWKHW\SHRIWUDQVSRUWDWLRQXVHG
RU WKH PHWKRGV RI SURGXFWLRQ 8. &DELQHW 2IILFH 'LIIHUHQW IRUPV RI WUDQVSRUW KDYH YDU\LQJ
HIIHFWVRQHPLVVLRQLQWHQVLW\DQGHFRORJLFDOLPSDFWWKXVRQO\WUDFNLQJWKHGLVWDQFHWUDYHOOHGIDLOVWRJLYH
DQDOOHQFRPSDVVLQJDVVHVVPHQWRIDSURGXFW¶VHFRORJLFDOLPSDFW
(YHQ RQFH WUDQVSRUWDWLRQ PHWKRGV DUH FRQVLGHUHG KRZHYHU WUDQVSRUWUHODWHG HPLVVLRQV FDQ EH
PLVOHDGLQJVLQFHWUDQVSRUWDWLRQPDNHVXSDUHODWLYHO\VPDOOSURSRUWLRQRIDSURGXFW¶VWRWDOHPLVVLRQVLQ
FRPSDULVRQWRWKHHQWLUHVXSSO\FKDLQ,QPDQ\FDVHVSURGXFWLRQUHODWHGHPLVVLRQVRXWZHLJKDQ\JDLQV
IURP ORFDOL]LQJ SURGXFWLRQ )DYRUDEOH ZHDWKHU DQG FOLPDWH FRQGLWLRQV DUH LPSRUWDQW IDFWRUV LQ WKH
HPLVVLRQ LQWHQVLWLHV RI SURGXFWLRQ DV UHIULJHUDWLRQ VWRUDJH DQG SURGXFWLRQ RI IRRGV YLD JUHHQKRXVH
PHWKRGVPD\HQWDLOPXFKODUJHUHPLVVLRQVWKDQWKHWUDQVSRUWDWLRQLWVHOI
7KHUHODWLYHHIIHFWRISURGXFWLRQPHWKRGVUHODWLYHWRWUDQVSRUWDWLRQUHODWHGHPLVVLRQVPHDQVWKDW
PDQ\ JRRGV WKDW DUH VRXUFHG IURP GHYHORSLQJ FRXQWULHV DQG WKRVH IURP PRUH IDYRUDEOH FOLPDWHV PD\
KDYH PXFK ORZHU HPEHGGHG HPLVVLRQV WKDQ WKRVH VRXUFHG GRPHVWLFDOO\ RU IURP GHYHORSHG QRUWKHUQ
FRXQWULHV 7ZR UHFHQW VWXGLHV SURYLGH FOHDU H[DPSOHV RI WKLV $Q DQDO\VLV RI WKH FOLPDWLF LPSDFWV RI
IRRGFKRLFHVLQWKH86DQGIRXQGWKDWWKHSHUFHQWDJHRIHPLVVLRQVIURPWKHWUDQVSRUWDWLRQIRUGHOLYHU\RI
DSURGXFWLQUHJDUGVWRWKHWRWDOOLIHF\FOHHPLVVLRQVUDQJHGIURPLQWKHFDVHRIUHGPHDWVWRIRU
IUXLWV DQG YHJHWDEOHV :HEHU DQG + 6 0DWWKHZV 7KH OHVV LQWHQVLYH WKH XVH RI IRVVLO IXHOV
QLWURJHQ IHUWLOL]HU DQG HPLVVLRQ LQWHQVLYH LQSXWV LQ WKH PDQXIDFWXUH RI WKH JRRG WKH KLJKHU WKH
SHUFHQWDJHRIHPLVVLRQVIURPWUDQVSRUWDWLRQ7KHGLIIHULQJDPRXQWVUHIOHFWWKHHPLVVLRQLQWHQVLW\LQWKH
HQWLUH OLIH F\FOH RI WKH IRRG VRXUFHV 7KH VWXG\ FRQFOXGHG WKDW WKH UHGXFWLRQV LQ HPLVVLRQV IURP QRW
FRQVXPLQJ KLJKLPSDFW IRRG UHG PHDW DQG GDLU\ MXVW RQH GD\ D ZHHN LQ IDYRU RI ORZHULPSDFW
DOWHUQDWLYHVDUHHTXLYDOHQWWRWKHJDLQVIURPOHVVWUDQVSRUWDWLRQUHODWHGHPLVVLRQVIURPFRQVXPLQJRQO\
ORFDOSURGXFWVIRUDQHQWLUH\HDU
$VWXG\RIIRXUDJULFXOWXUDOSURGXFWVSURGXFHGLQWKH8.DQGLQ1HZ=HDODQGDQGFRQVXPHGLQ
WKH8.FRQFOXGHGWKDWHYHQDIWHUFRQVLGHULQJWUDQVSRUWDWLRQHPLVVLRQVWKH1=SURGXFWVFRQWDLQHGORZHU
HPEHGGHG FDUERQ WKDQ WKRVH RI WKHLU 8. FRXQWHUSDUWV LQ WKUHH RI WKH IRXU JRRGV 7KH VWXG\ WRRN LQWR
DFFRXQW WKH HQWLUH OLIH F\FOH DQDO\VLV DQG HPLVVLRQV RI WKH JRRGV WKURXJKRXW WKH SURGXFWLRQ FKDLQ
6DXQGHUV%DUEHUDQG7D\ORU
7KHPLOHGLHWLVDVRFLDOPRYHPHQWLQZKLFKWKHJRDOLVWRVRXUFHORFDOO\JURZQIRRGLQDQDWWHPSWWRPLQLPL]HDQLQGLYLGXDO¶V
HFRORJLFDOIRRWSULQW
)RUH[DPSOHDLUWUDQVSRUWDWLRQKDVDODUJHUHPLVVLRQIRRWSULQWWKDQVHDEDVHGDOWHUQDWLYHV
6DXQGHUV%DUEHU DQG 7D\ORU 6DXQGHUV %DUEHU DQG 6RUHQVRQ +RJDQDQG 7KRUSH &KL 0DF*UHJRU DQG .LQJ
:LOOLDPV:\QHQDQG9DQ]HWWL7KHHPLVVLRQLQWHQVLW\DQGGHJUHHRISURFHVVLQJLVRIFRXUVHDODUJHIDFWRU(YHQ
LQWKHFDVHRISULPDU\DJULFXOWXUDOJRRGVWUDQVSRUWDWLRQVWLOOFRQWULEXWHVPLQLPDOO\WRWRWDORYHUDOOHPLVVLRQV
6HH %UHQWRQ HW DO +RJDQ DQG 7KRUSH DQG 6DXQGHUV HW DO IRU D OLVW RI VWXGLHV WKDW ORRN DW FDUERQ
FRPSHWLWLYHQHVVRIGLIIHUHQWJRRGVVRXUFHGORFDOO\DQGWKRVHVRXUFHGIURPGLVWDQWPDUNHWVUHTXLULQJWUDQVSRUWDWLRQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
7$%/(
&203$5,6212)(0,66,215$7,26)256(/(&7('352'8&76
'DLU\
$SSOHV
(QHUJ\8VH
0-W
5DWLR
8QLWHG
.LQJGRP
1HZ
=HDODQG
&DUERQ(PLVVLRQV
.*&2W
5DWLR
8QLWHG
.LQJGRP
1HZ
=HDODQG
8.1=
8.1=
2QLRQ
/DPE
6RXUFH:\QHQ(DQG'9DQ]HWWL
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
,,, 1DWLRQDODQGLQWHUQDWLRQDO
PHWKRGRORJLHVIRUWUDFNLQJ
HPLVVLRQV
7R GDWH WKHUH H[LVWV QR LQWHUQDWLRQDOO\ DJUHHGXSRQ FDUERQ ODEHOLQJ
VWDQGDUG 7KH UHVXOW KDV EHHQ D QXPEHU RI SULYDWH ODEHOLQJ LQLWLDWLYHV
KLJKO\ VXVFHSWLEOH WR WKH LQIOXHQFH RI VSHFLDO LQWHUHVW JURXSV &RWWLHU
1DUWRYD DQG %LJGHOL SS $V VXFK SULYDWH ODEHOLQJ
LQLWLDWLYHV FDQ SRWHQWLDOO\ FRQIXVH FRQVXPHUV DQG DOVR UXQ WKH ULVN RI
XQGHUPLQLQJWKHFUHGLELOLW\RIIXWXUHODEHOLQJVWDQGDUGV7KHSUROLIHUDWLRQ
RI HFRODEHOV VSHFLILFDOO\ RI FDUERQ IRRWSULQW ODEHOV E\ YDULRXV UHWDLOHUV
XQGHUOLQHVWKHQHHGIRUVWDQGDUGVDQGJXLGHOLQHV:HLGHPDHWDO
$QXPEHURIDFFRXQWLQJVWDQGDUGVKDYHEHHQSXEOLVKHGEXWPDQ\
XVH FRQIOLFWLQJ PHWKRGV RI FDOFXODWLQJ DQG HVWLPDWLQJ FDUERQ HPLVVLRQV
7KHGLIIHUHQFHVLQWKRVHPHWKRGRORJLHVFDQUHVXOWLQLPSRUWDQWGLIIHUHQFHV
LQ WKH ILQDO PHDVXUH RI WKH IRRWSULQW RI D JLYHQ SURGXFW %HFDXVH RI WKLV
HIIRUWV DUH XQGHUZD\ WR FDUHIXOO\ GHILQH HDFK PHWKRGRORJ\ DQG WR ZRUN
WRZDUGDQLQWHUQDWLRQDOO\DFFHSWHGV\VWHPWKDWDOORZVIDLUDQGWUDQVSDUHQW
PHDVXUHPHQWVDQGFURVVSURGXFWFRPSDULVRQV
6RPH VWDQGDUGV IRU HVWLPDWLQJ HPLVVLRQV XVH ERWWRPXS
PHWKRGRORJLHVDQGSURGXFWVSHFLILFLW\ZKLOHRWKHUVXVHWRSGRZQPHWKRGV
DQGPRUHJHQHUDODSSURDFKHV%RWWRPXSDSSURDFKHVLQFOXGHPRVWO\VLWH
VSHFLILF ILUVW RUGHU LQSXWV DQG FDQ EH OLPLWHG LQ WKHLU VFRSH 7RSGRZQ
DSSURDFKHV DUH ODUJHU HVWLPDWLRQV WKDW LQFOXGH KLJKHU RUGHU LPSDFWV DQG
XVH HQYLURQPHQWDO GDWD IURP HFRQRP\ZLGH HPLVVLRQV 7KH\ WHQG WR EH
OHVV WLPH DQG ODERU LQWHQVLYH EXW DUH DOVR OHVV DFFXUDWH DW WKH LQGLYLGXDO
SURGXFWOHYHO%ROZLJDQG*LEERQ2WKHUVWDQGDUGVKDYHHPHUJHG
WKDWXVHK\EULGWHFKQLTXHVRIHPLVVLRQTXDQWLILFDWLRQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
+RZHYHU RQH RI WKH SULQFLSDO GLIIHUHQFHV DPRQJ WKH VWDQGDUGV LV WKDW HDFK KDV D GLIIHUHQW
ERXQGDU\RUVFRSHRIZKDWVKRXOGRUVKRXOGQRWEHLQFOXGHGLQWKHHVWLPDWLRQRIWKHSURGXFWV¶IRRWSULQW
6 0DWWKHZV+HQGULFNVRQDQG :HEHU 7KH LQFOXVLRQ RU H[FOXVLRQ RI FHUWDLQ HPLVVLRQV JUHDWO\
DIIHFWV WKH RYHUDOO DFFRXQWLQJ RI HPEHGGHG FDUERQ ZLWKLQ D SURGXFW %HFDXVH RI WKLV WKH FKRLFH RI
PHWKRGRORJ\ LV D NH\ IDFWRU LQ DQ\ YROXQWDU\ RU PDQGDWRU\ FDUERQ DFFRXQWLQJ V\VWHP ERUGHU FDUERQ
DGMXVWPHQWV RU FDUERQ GXWLHV RQ LPSRUWHG JRRGV $ FKRVHQ DFFRXQWLQJ PHWKRGRORJ\ ZLOO KDYH
LPSOLFDWLRQV IRU WKH FRPSHWLWLYHQHVV RI SURGXFWV IURP GLIIHUHQW UHJLRQV LQFOXGLQJ WKRVH IURP /DWLQ
$PHULFDDQGWKH&DULEEHDQDFFRUGLQJWRWKHPHWKRGVXVHGLQGXULQJSURGXFWLRQ)RUH[DPSOHSURGXFWV
WKDWKDYHDORZFDUERQHQHUJ\PDWUL[ZLOOEHQHILWZKLOHWKRVHWKDWXVHDKLJKGHJUHHRIODQGDQGODERU
PLJKWEHKDUPHG
$
,62VWDQGDUGV
7KH ,62 VHULHV VWDQGDUGV ZKLFK SHUWDLQ WR HQYLURQPHQWDO PDQDJHPHQW V\VWHPV XVH WKH /LIH
&\FOH $VVHVVPHQW /&$ PHWKRGRORJ\ WR DVVHVV GLUHFW HPLVVLRQV GXULQJ WKH SURGXFWLRQ RI D JRRG DV
ZHOODVDFRPSOHWHFDUERQDFFRXQWLQJWKDWLQFOXGHVWKHPDQXIDFWXULQJSURFHVVGLVWULEXWLRQDQGGLVSRVDO
%ROZLJ DQG *LEERQ 7KH VWDQGDUGV KDYH XQGHUJRQH PDQ\ UHYLVLRQV WKDW KDYH EXLOW RQ WKH
PHWKRGRORJ\ DQG LPSURYHG DFFXUDF\ 7KH ,62 PHWKRGRORJLHV XVHG WR FRPSXWH FDUERQ HPLVVLRQV DUH
DFFHVVLEOHWRJRYHUQPHQWVLQGXVWULHVDQGWKHSXEOLFIRUDIHH7KHXSFRPLQJUHOHDVHRIWKH,62
VWDQGDUGZLOOSHUWDLQVSHFLILFDOO\WRWKHFDUERQIRRWSULQWRISURGXFWV
+RZHYHUWKHUHDUHVRPHSUREOHPVVXUURXQGLQJWKHXVHRI,62VWDQGDUGV7KHUHLVQRDJUHHPHQW
RQ ZKLFK PHWKRGRORJ\ WR XVH ZKHQ FDOFXODWLQJ D SURGXFW¶V FDUERQ IRRWSULQW 3&) WKHUH LV QR
DJUHHPHQWRQOLIHF\FOHERXQGDULHVWKHUHLVDODFNRIUHOLDEOHGDWDDQGUDUHO\GRWKHUHVXOWLQJIRRWSULQWV
FRQWDLQWKHGHWDLOVRIWKHPHWKRGRORJ\HPSOR\HGWRGHWHUPLQHWKH3&)%ROZLJDQG*LEERQ
$QRWKHUFRQFHUQZLWK/&$DSSOLFDWLRQVWKDWXVH,62VWDQGDUGVLVWKDWYHU\IHZDQDO\VWVKDYHWKH
DELOLW\ WR FRPSDUH WKH LQSXWRXWSXW PRGHOLQJ RI *+*V ZLWKLQ WKH SURGXFWLRQ PHWKRG WR HQFRPSDVV D
SURGXFW¶V OLIHF\FOH HPLVVLRQV 7KLV LV IXUWKHU FRPSOLFDWHG ZKHQ FRQVLGHULQJ WKH GLIIHUHQFHV WKDW H[LVW
DPRQJFRXQWULHVDWYDU\LQJOHYHOVRIGHYHORSPHQW:LHGPDQQHWDOPDNHDFRPSHOOLQJFDVHWKDW
LI HPEHGGHG FDUERQ DFFRXQWLQJ LV WR EH GRQH ZLWK DQ\ OHYHO RI DFFXUDF\ D PXOWLUHJLRQ LQSXWRXWSXW
PRGHOVKRXOGEHHPSOR\HGWRFRYHUDOOFRXQWULHVWKDWWUDGHZLWKWKHGRPHVWLFFRXQWU\7KHGDWDPXVWEH
FRQVLVWHQWDQGDFFXUDWHLQRUGHUWRFDOFXODWHWKHHPEHGGHGFDUERQ7KLVGDWDPD\EHGLIILFXOWWRREWDLQLQ
GHYHORSLQJ FRXQWULHV DQG PD\ EH XQUHOLDEOH RU LQWHUPLWWHQW ,I WKH JRDO RI FDUERQ IRRWSULQWLQJ LV WR
SXEOLFL]HDSURGXFW¶VWUXHOHYHORIHPEHGGHGFDUERQRULQWKHH[WUHPHFDVHWRPHDVXUHDQGFRPSDUHWKH
WUDGHUHODWHG HPEHGGHG FDUERQ RI D JRRG WKHQ WKH PRGHO PXVW HQWDLO D YHU\ GLIILFXOW PXOWLUHJLRQ
LQSXWRXWSXWDQDO\VLVRI&27KLVZLOOUHTXLUHVLJQLILFDQWKXPDQFDSLWDODQGLQVWLWXWLRQDOFDSDFLW\
,62 VWDQGDUGV DUH YROXQWDU\ DQG VHUYH DV LQWHUQDWLRQDO JXLGHOLQHV $IWHU DFFHSWDQFH DQG
VXEVHTXHQWXVHWKH\FDQEHFRPHDUHTXLUHPHQWLQFHUWDLQPDUNHWVZKHQDGRSWHGDVDQRUPDFURVVWKH
HQWLUHLQGXVWU\7KH3$6GHYHORSHGLQWKH8.LVWKHRQO\RWKHUVWDQGDUGWKDWFRPSHWHVZLWKWKH
,62VWDQGDUGV7KHUHDUHKRZHYHUDZLGHYDULHW\RIVWDQGDUGVDQGRQOLQHFDUERQIRRWSULQWFDOFXODWRUV
WKDWDUHXVHGE\GLVWLQFWVHJPHQWVRIVRFLHW\
%
3$6VWDQGDUG
7KH3$6VWDQGDUGLVD/LIH&\FOH$VVHVVPHQW/&$PHWKRGDQGFRQVLVWVRIDGHWDLOHGDQGFRPSOH[
ERWWRPXSTXDQWLILFDWLRQRIGLUHFWDQGLQGLUHFWHPLVVLRQV$FFRUGLQJWRWKH%ULWLVK6WDQGDUGV,QVWLWXWHWKH
3$6 VWDQGDUG DLPV WR EULGJH WKH JDS EHWZHHQ FRPSOH[ ERWWRP XS DSSURDFKHV WKDW \LHOG GLIIHUHQW
UHVXOWVDFFRUGLQJWR VFRSHERXQGDULHVDQGUHOLDELOLW\RIGDWDDQGWKH PRUHJHQHUDO WRSGRZQDSSURDFKHV
,IDWDULIILVWREHOHYLHGRQDJRRGEDVHGRQFDUERQFRQWHQWLWLVLPSRUWDQWWKDWWKHOHYHORIDFFXUDF\WKURXJKRXWWKHHQWLUHVXSSO\
FKDLQEHDVDFFXUDWHDVSRVVLEOH7KHVWDQGDUGPXVWWKHUHIRUHEHWUXO\XQLYHUVDODQGWKLUGSDUW\YHULILHG
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
WKDWDUHWRREURDGWR \LHOGDQ\GHWDLOLQUHJDUGV WRSURGXFWVSHFLILFLW\ %ULWLVK6WDQGDUGV,QVWLWXWH
7KHJRYHUQPHQWHQGRUVHGVWDQGDUGZDVGHYHORSHGMRLQWO\E\WKH&DUERQ7UXVWDQGWKH%ULWLVK6WDQGDUGV
,QVWLWXWH %6, DQG LV EDVHG RQ SUHYLRXVO\ UHOHDVHG ,62 VWDQGDUGV 7KH VWDQGDUG LQFOXGHV D JXLGH WR
FDOFXODWH HPLVVLRQV IRU WKH HQWLUH OLIHF\FOH RI D SURGXFW LQFOXGLQJ WKH FKDQJH LQ ODQG XVH VLQFH WUDQVSRUWDWLRQDQGRWKHUHPLVVLRQVZLWKLQWKHERXQGDULHVRISURGXFWLRQ%ROZLJDQG*LEERQ
7KH 3$6 VWDQGDUG GRHV QRW LQFOXGH LQ LWV ERXQGDULHV FHUWDLQ *+* HPLVVLRQV WKDW PD\
EHQHILWRUSURYLGHDQDGYDQWDJHWR/$&H[SRUWVVXFKDV
• +XPDQHQHUJ\LQSXWVLHSLFNLQJIUXLWE\KDQGUDWKHUWKDQXVLQJPDFKLQHU\
• &DSLWDOFRVWV±EXLOGLQJVPDFKLQHU\RWKHUHTXLSPHQW
• 7UDQVSRUWDWLRQRIZRUNHUVWRDQGIURPWKHLUZRUNSODFH
• $QLPDOVWUDQVSRUWVHUYLFHVJRRGVRUZRUNHUV
/DWLQ$PHULFDQDQG&DULEEHDQSURGXFWLRQJHQHUDOO\LQFOXGHVPRUHODERULQWHQVLYHSURGXFWLRQDQG
OLNHO\ PRUH ZRUNHUV XVLQJ SXEOLF WUDQVSRUWDWLRQ ELNLQJ RU ZDONLQJ WR ZRUN 7KH LQFOXVLRQ RI WKHVH
HPLVVLRQ VRXUFHV ZLWKLQ WKH ERXQGDULHV RI 3&) PD\ SURYLGH D PRUH DFFXUDWH UHSUHVHQWDWLRQ RI WRWDO
HPEHGGHGFDUERQ$VWKHVHERXQGDULHVDUHFXUUHQWO\H[FOXGHGXQGHUSDUDJUDSKRIWKH3$6WKLV
PD\ SUHIHUHQWLDOO\ IDYRU JRRGV IURP LQGXVWULDOL]HG FRXQWULHV RYHU WKRVH IURP GHYHORSLQJ DQG OHDVW
GHYHORSHG FRXQWULHV %ROZLJ DQG *LEERQ ,Q DGGLWLRQ /&$ PHWKRGV RI DFFRXQWLQJ IRU FDUERQ
FRQWHQWFDQEHYHU\UHVRXUFHLQWHQVLYHWRLPSOHPHQW
&
%LODQ&DUERQH
7KH )UHQFK *RYHUQPHQW VSHDUKHDGHG WKH LQWURGXFWLRQ RI D VWDQGDUG NQRZQ DV %LODQ &DUERQH 7KLV
VWDQGDUGZDVFUHDWHGWKURXJKWKH$JHQFHGHO¶(QYLURQQHPHQWHWGHOD0DvWULVHGHO¶(QHUJLH$'(0(
DQG LV EHLQJ HPSOR\HG E\ D QXPEHU RI )UHQFK FRPSDQLHV 7KH )UHQFK ODEHOLQJ LQLWLDWLYH LV VDLG WR EH
FRPSDWLEOHZLWKWKH,62VWDQGDUGDQGLQFOXGHVPHWKRGRORJLHVIRUFDOFXODWLQJWKHHPLVVLRQVRIQRW
RQO\DFWLYLWLHVEXWUHJLRQVDVZHOO$'(0(
7KH%LODQ&DUERQHPHWKRGRORJ\DQGFDOFXODWLRQVPD\RQO\EHXVHGE\FHUWLILHGLQGLYLGXDOVZKR
KDYHDWWHQGHG$'(0(¶V%LODQ&DUERQHWUDLQLQJVHVVLRQV7KLVPD\HQVXUHWKDWLQGLYLGXDOVDUHFRUUHFWO\
FDOFXODWLQJWKH3&)RIDJRRGDFFRUGLQJWRWKHPHWKRGRORJ\EXWWKHDYDLODELOLW\RIVXFKWUDLQLQJVHVVLRQV
PD\DOVRSRVHDEDUULHUWRWKHDGRSWLRQRIVXFKVWDQGDUGV
'
1HZPHWKRGRORJLHVLQLWLDWLYHVDQGODEHOLQJVFKHPHV
$V FDUERQ DFFRXQWLQJ LV VWLOO D UHODWLYHO\ QHZ FRQFHSW RUJDQL]DWLRQV LQYROYHG LQ WKH FUHDWLRQ RI
VWDQGDUGVFRQWLQXHWRUHOHDVHXSGDWHGYHUVLRQVXVLQJVOLJKWO\GLIIHUHQWPHWKRGRORJLHVIRUFDOFXODWLRQDQG
GLIIHUHQWERXQGDULHVZLWKLQWKHLUVFRSH7KH:RUOG5HVRXUFHV,QVWLWXWHDQG:RUOG%XVLQHVV&RXQFLOIRU
6XVWDLQDEOH 'HYHORSPHQW :5,:%&6' XQGHU WKHLU ³*UHHQKRXVH *DV 3URWRFRO ,QLWLDWLYH´ KDYH
FUHDWHGWKH*UHHQKRXVH*DV3URWRFRO*+*3URWRFROWKDWVHUYHVDVWKHEDVLVIRUPDQ\RWKHUHPLVVLRQV
DFFRXQWLQJPHWKRGRORJLHV7KHSURWRFROKDVEHHQXSGDWHGDQGLVH[SHFWHGWREHSXEOLVKHGLQPLG
*UHHQKRXVH *DV 3URWRFRO ,QLWLDWLYH 7KH ,QWHUQDWLRQDO 2UJDQL]DWLRQ IRU 6WDQGDUGL]DWLRQ LV DOVR
H[SHFWHGWRSXEOLVKWKHLUUHYLVHG,62³&DUERQ)RRWSULQWRI3URGXFWV´VWDQGDUGLQ%ROZLJ
DQG*LEERQS
6HYHUDO JRYHUQPHQWV DUH GHYHORSLQJ SURFHGXUHV DQG QRUPV IRU WKH SULYDWH VHFWRU WR XVH LQ
PHDVXULQJ WKH HQYLURQPHQWDO LPSDFW RI JRRGV DQG VHUYLFHV ,Q DGGLWLRQ WR SURGXFWVSHFLILF DFFRXQWLQJ
DQGFHUWLILFDWLRQJRYHUQPHQWVDUHDOVRLQWHUHVWHGLQSURPRWLQJEHWWHUFRUSRUDWHSURFHVVHVDQGHIILFLHQF\
6HH%ULWLVK6WDQGDUGV,QVWLWXWH
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
7KHHIIRUWVE\RIILFLDODJHQFLHVRIWHQRFFXULQSDUWQHUVKLSZLWKWKHSULYDWHVHFWRUDQGLQFOXGHGHYHORSLQJ
ODEHO VWDQGDUGV DGDSWLQJ H[LVWLQJ PHWKRGRORJLHV WR WKHLU QDWLRQDO FRQWH[W FUHDWLQJ JXLGHOLQHV DQG
PDQXDOV IRU SURGXFHUV GLVWULEXWLQJ LQIRUPDWLRQ WR SURGXFHUV DQG FRQVXPHUV DQG FKDQJLQJ WKHLU RZQ
VWDQGDUGVRISURFXUHPHQWWRHQFRXUDJHVXSSOLHUVWRUHGXFHHPLVVLRQVLQWKHLUVXSSO\FKDLQV
,Q 7DLZDQ IRU H[DPSOH WKH DXWKRULWLHV DUH HQFRXUDJLQJ ODUJH UHWDLOHUV WR UHTXLUH VXSSOLHUV WR
VXSSO\ FDUERQ IRRWSULQW ODEHOHG SURGXFWV 7KH JRYHUQPHQW ZLOO DOVR EH UHTXLUHG WR H[WHQG LWV FXUUHQW
³*UHHQ0DUN´SXUFKDVLQJV\VWHPDQGJLYHSUHIHUHQFHWRFDUERQODEHOHGSURGXFWV,QUHVSRQVHWRJOREDO
YHQGRUV ZKR DUH VWDUWLQJ WR GHPDQG LQIRUPDWLRQ RQ WKH OHYHO RI HPLVVLRQV RI JRRGV WKH ,QGXVWULDO
'HYHORSPHQW %XUHDX ZLOO SURYLGH DVVLVWDQFH WR 7DLZDQHVH PDQXIDFWXUHUV WR KHOS WKHP FDOFXODWH WKH
FDUERQ IRRWSULQW RI WKHLU JRRGV 7KH HOHFWULFDO HOHFWURQLF DQG SKRWRYROWDLF LQGXVWULHV KDYH VKRZQ
SDUWLFXODULQWHUHVWLQWKLVSURJUDPDQGVHHLWDVDFRPSHWLWLYHQHVVLVVXH0LQLVWU\RI)RUHLJQ$IIDLUV
7UDGHDQG1HZ=HDODQG7UDGH(QWHUSULVHED
,Q ,WDO\ WKH 0LQLVWU\ RI WKH (QYLURQPHQW KDV DQQRXQFHG WKDW LW ZLOO LPSOHPHQW D SURJUDP WR
UHGXFH *+* HPLVVLRQV LQ WKH DJULFXOWXUDO VHFWRU 7KH SURJUDP LV VWLOO LQ LWV SODQQLQJ SKDVHV EXW
DXWKRULWLHVDUHFRQVLGHULQJSURMHFWVWKDWDLPWRUHGXFHWKHHQYLURQPHQWDOLPSDFWRISURGXFWLRQDFWLYLWLHV
HJOLYHVWRFNIDUPLQJDQGDOVRWDUJHWFRQVXPHUEHKDYLRUHJVXVWDLQDEOHGLHW7KH0LQLVWU\RIWKH
(QYLURQPHQWZLOODOVRGHYHORSDV\VWHPRIFDUERQIRRWSULQWDQDO\VLVLQOLQHZLWKWKHV\VWHPWKDWH[LVWVLQ
WKH8.0LQLVWU\RI)RUHLJQ$IIDLUV7UDGHDQG1HZ=HDODQG7UDGH(QWHUSULVHE
,Q)UDQFHDQDWLRQDOLQLWLDWLYHWRSURPRWHHQYLURQPHQWDOUHVSRQVLELOLW\LQFOXGHVDQHQYLURQPHQWDO
ODEHOQRWQHFHVVDULO\UHODWHGGLUHFWO\WRFDUERQFRQWHQW7KH)UHQFK1DWLRQDO$VVHPEO\KDVDSSURYHGD
QHZHQYLURQPHQWDOUHVSRQVLELOLW\ODZWKDWPDNHVVLJQLILFDQWFKDQJHVWRPDQ\DUHDVLQFOXGLQJFRUSRUDWH
VRFLDOUHVSRQVLELOLW\EXLOGLQJFRGHVDQGRWKHUV)UHQFK1DWLRQDO$VVHPEO\7KHQHZODZNQRZQ
DV³*UHQHOOH´PDQGDWHVDPRQWKWULDOSHULRGIRUDQHQYLURQPHQWDOODEHOLQJVFKHPHWREHJLQLQ-XO\
'HSHQGLQJ RQ WKH UHVXOWV RI WKLV SLORW SURJUDP WKH $VVHPEO\ ZLOO GHFLGH ZKHWKHU DQG KRZ WR
H[SDQGLWWRWKHHQWLUH)UHQFKHFRQRP\,WLVVWLOOXQFOHDUZKLFKSURGXFWVDQGVHFWRUVZLOOEHSDUWRIWKH
SLORWSURJUDPKRZLWZLOOEHPHDVXUHGDQGKRZWKHQHZHFRODEHOZLOOEHGLVSOD\HG
-DSDQ WKH 5HSXEOLF RI .RUHD 1HZ =HDODQG DQG 7KDLODQG DUH DOVR GHYHORSLQJ FDUERQ RU FOLPDWH
UHODWHG ODEHOV DQG VWDQGDUGV 7KH JRYHUQPHQW RI 6LQJDSRUH UHFHQWO\ DQQRXQFHG WKH FUHDWLRQ RI WKH
6LQJDSRUH &DUERQ /DEHO LQWHQGHG WR HPSKDVL]H WKH FRXQWU\¶V WUDQVLWLRQ WR D ORZ FDUERQ HFRQRP\
GLIIHUHQWLDWHWKHFRXQWU\¶VH[SRUWVDQGERRVWWKHLUH[SRUWFRPSHWLWLYHQHVV6LQJDSRUH*RYHUQPHQW
7KH VWDQGDUG LV EDVHG RQ WKH 3$6 DQG WKH GUDIW ,62 VWDQGDUGV DQG ZLOO EH D MRLQW LQLWLDWLYH
EHWZHHQ WKH 6LQJDSRUH (QYLURQPHQW &RXQFLO DQG WKH 6LQJDSRUH ,QVWLWXWH RI 0DQXIDFWXULQJ DQG
7HFKQRORJ\7KH6LQJDSRUH&DUERQ/DEHOLVVDLGWRLQFOXGHULJRURXVOLIHF\FOHDQDO\VLVDVZHOODVHPLVVLRQ
UHGXFWLRQUHFRPPHQGDWLRQVIRUEXVLQHVV1HLWKHUWKHJRYHUQPHQWQRUWKHLQVWLWXWHVKDYH\HWUHYHDOHGDQ\
GHWDLOVRIWKHPHWKRGRORJ\DQGERXQGDU\OLPLWVRIWKHQHZLQLWLDWLYH6LQJDSRUH*RYHUQPHQW
5HJDUGOHVVRIWKHFUHGLELOLW\RILQGLYLGXDOVWDQGDUGVRUODEHOLQJVFKHPHVLWLVFOHDUWKDWWKHVHWRROV
KDYHDWWUDFWHGWKHDWWHQWLRQRIJRYHUQPHQWVDQGWKHSULYDWHVHFWRU6KRXOGFRQVXPHUVEHZLOOLQJWRSD\D
SUHPLXP IRU ORZHU FDUERQ FRQWHQW DQG PRUH LPSRUWDQWO\ LI FRPSDQLHV H[SDQG WKH XVH WKHVH WRROV WR
LGHQWLI\LQHIILFLHQWSURFHVVHVFDUERQDFFRXQWLQJPHWKRGRORJLHVZLOOEHFRPHDXVHIXOWRROLQWKHHIIRUWWR
FRPEDWFOLPDWHFKDQJH2QWKHRWKHUKDQGWKHSRWHQWLDOHIIHFWVRIWKHVHPHWKRGRORJLHVDQGVFKHPHVRQ
JOREDOWUDGHSDWWHUQVSDUWLFXODUO\DVWKH\UHODWHWRGHYHORSLQJQDWLRQVDUHDFDXVHIRUFRQFHUQ&DUERQ
DFFRXQWLQJ PHWKRGRORJLHV DQG ODEHOLQJ VFKHPHV DUH HPHUJLQJ DV QHZ WHFKQLFDO EDUULHUV WR WUDGH DQGD
IRUPRISURWHFWLRQLVP
(
2WKHUVWDQGDUGV
2WKHU VWDQGDUGV H[LVW QRW RQO\ IRU FDUERQ ODEHOLQJ EXW DOVR IRU FOLPDWH IULHQGO\ SUDFWLFHV WKURXJKRXW WKH
ZRUOG LQFOXGLQJ LQ $XVWULD )UDQFH *HUPDQ\ -DSDQ 1HZ =HDODQG 5HSXEOLF RI .RUHD 6ZHGHQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
6ZLW]HUODQG7KDLODQG8QLWHG.LQJGRPDQGWKH(XURSHDQ8QLRQ6ZHGHQ¶VV\VWHPLVQRWDEOHIRUEHLQJ
WKHILUVWFRXQWU\ZLGHFOLPDWHVWDQGDUGIRUODEHOLQJIRRGSURGXFWVWKRXJKLWLVQRWPDQGDWRU\5DWKHUWKDQD
3URGXFW&DUERQ)RRWSULQW3&)ODEHOLWFHUWLILHVVXSSOLHUVRIGRPHVWLFDQGLPSRUWHGSURGXFWVSURGXFHUV
GLVWULEXWRUVDQGUHWDLOHUVDVKDYLQJPDGH³VLJQLILFDQWHIIRUWV´WRUHGXFHFDUERQHPLVVLRQVWKURXJKRXWWKH
IRRG SURGXFWLRQ FKDLQ ,W ZDV GHYHORSHG DQG LV PDQDJHG LQ FRRSHUDWLRQ ZLWK SULYDWH DQG SXEOLF
RUJDQL]DWLRQVLQFOXGLQJYDULRXVIRRGVXSSOLHUVDQGWKH)HGHUDWLRQRI6ZHGLVK)DUPHUV
3HUKDSVWKHROGHVWDQGPRVWPDWXUHODEHOEHORQJVWRWKH*HUPDQ%OXH$QJHOVHDO7KHODEHOKDV
EHHQ LQ XVH VLQFH DQG LV DZDUGHG WR WKH WRS RI SURGXFWV WKDW ³FRQVHUYH ZDWHU SURWHFW WKH
FOLPDWH FRQVHUYH UHVRXUFHV DQG SURWHFW KHDOWK´ )RRG SURGXFWV DUH QRW FRYHUHG LQ WKH EOXH ODEHO EXW
FXUUHQWO\SURGXFWVDUHFRYHUHGLQGLIIHUHQWFDWHJRULHV'HU%ODXH(QJHO*HUPDQ\KDV
DOVR EHJXQ D 3&) 3LORW SURMHFW ZLWK WKH LQYROYHPHQW RI FRPSDQLHV LQLWLDWHG E\ WKH LQGHSHQGHQW
%HUOLQEDVHGWKLQNWDQN7+(0$LQSDUWQHUVKLSZLWKWKH,QVWLWXWHRI$SSOLHG(FRORJ\DQGWKH3RWVGDP
,QVWLWXWHIRU&OLPDWH,PSDFW5HVHDUFK7+(0$
3ULYDWH FDUERQ ODEHOV KDYH DOVR EHHQ LQWURGXFHG LQ WKH 86 DQG &DQDGD 7KH :DVKLQJWRQ '&
EDVHG &DUERQ )XQG KDV HVWDEOLVKHG D µ&HUWLILHG &DUERQ )UHH¶ ODEHO WKDW XVHV /LIH &\FOH $VVHVVPHQW
/&$ PHWKRGRORJ\ DQG FHUWLILHG FDUERQ RIIVHWWHUV WR UHQGHU D SURGXFW FDUERQ QHXWUDO 7KH &OLPDWH
&RQVHUYDQF\D&DOLIRUQLDEDVHGRUJDQL]DWLRQIRXQGHGE\VFLHQWLVWVIURP6WDQIRUG8QLYHUVLW\XVHV/&$
PHWKRGRORJ\WRLQIRUPFRQVXPHUVRQWKH*+*LQWHQVLW\SHUGROODURISURGXFW:LWKLQ&DQDGD&DUERQ
&RXQWHGKDVLQWURGXFHGDODEHODQGDOORZVEXVLQHVVHVWRXVH&DUERQ&RQQHFWDQRQOLQHFDOFXODWRUWKDW
HVWDEOLVKHVDFDUERQIRRWSULQWXVLQJ/&$7KHEXVLQHVVWKHQXQGHUJRHVDWKLUGSDUW\DXGLWDQGLVLVVXHG
&DUERQ &RXQWHG ODEHOV GLVSOD\LQJ WKH SURGXFWV¶ 3&) 6LJQLILFDQW SDUWLFLSDWLRQ LQ YROXQWDU\ FOLPDWH
ODEHOVKDYH\HWWREHUHDOL]HGLQWKH86DQG&DQDGDDOWKRXJKWKLVPD\FKDQJHZKHQWKHJRYHUQPHQWVRI
WKHUHJLRQDQQRXQFHWKHLUORQJDZDLWHGFOLPDWHFKDQJHDFWLRQSODQV
7$%/(
&$5%21/$%(/,1*,1,7,$7,9(6%<&28175<
&RXQWU\
6FKHPHQDPH
3URGXFW
FRYHUDJH
/DXQFKHG
1RFHUWLILHG
SURGXFWV
0HWKRGRORJ\
$XVWUDOLD
3ODQHW$UN
$OO*RRGVDQG
6HUYLFHV
$XVWULD
+RIHU&DUERQ
/DEHOLQJ
)RRG3URGXFWV
IRXUWKFRPLQJ
,62
&DQDGD
&DUERQ&RQQHFW
,62
&DQDGD
&DUERQ/DEHOVRUJ
)RRG3URGXFWV
3$6
&KLOH
,,$3URMHFW
)RRG3URGXFWV
DVVHVVHG
3$6
&KLQD
0LQLVWU\RI
(QYLURQPHQWDO
3URWHFWLRQ
)UDQFH
,QGLFH&DUERQH
&DVLQR
)UDQFH
IRUWKFRPLQJ
QD
)RRG3URGXFWV
,62
-
pFRQRPLVHPD
3ODQqWH%LODQ
&2
)RRG3URGXFWV
FDWHJRULHV
SURGXFWV
*HUPDQ\
6WRS&OLPDWH
&KDQJH
$OO*RRGVDQG
6HUYLFHV)RFXV
RQ)RRG
,QWHUQDWLRQDO
&DUERQ'LVFORVXUH
3URMHFW
&RUSRUDWLRQV
%LODQ&DUERQH
,62
4XHVWLRQQDLUH
FRQWLQXHG
$FRPSOHWHOLVWZLWKDGGLWLRQDOLQIRUPDWLRQFDQEHREWDLQHGRQWKH3&):RUOG)RUXPZHEVLWHZZZSFIZRUOGIRUXPRUJ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
7DEOHFRQFOXGHG
&RXQWU\
6FKHPHQDPH
/DXQFKHG
,WDO\
0LQLVWU\RIWKH
(QYLURQPHQW
IRUWKFRPLQJ
-DSDQ
&DUERQ/DEHO
-DSDQ
1HWKHUODQGV
3URGXFWFRYHUDJH
1RFHUWLILHG
SURGXFWV
0HWKRGRORJ\
$JULFXOWXUDO
QD
$OO*RRGVDQG
6HUYLFHV
,62
1DWXUH0RUH
7UDFHDQG7HOO
6\VWHP
)RRG3URGXFWV
QD
1HZ=HDODQG
&DUER1=HUR
$OO*RRGVDQG
6HUYLFHV
3$6
6RXWK.RUHD
&DUERQ)RRWSULQW
/DEHO
$OO*RRGVDQG
6HUYLFHV
3$6
6LQJDSRUH
6LQJDSRUH&DUERQ
/DEHO
$OO*RRGVDQG
6HUYLFHV
QD
3$6,62
6SDLQ
(3($
$JULFXOWXUDO
6ZHGHQ
9HULILHG
6XVWDLQDEOH
(WKDQRO,QLWLDWLYH
(WKDQRO
6ZHGHQ
&OLPDWH
'HFODUDWLRQV
$OO*RRGVDQG
6HUYLFHV
6ZHGHQ
&OLPDWH/DEHO
6ZLW]HUODQG
$SSURYHGE\
&OLPDWRS
7DLZDQ
DVVHVVHG
(3($
3$6
/&$
)RRG3URGXFWV
QD
,62
$OO*RRGVDQG
6HUYLFHV
DVVHVVHG
*UHHQ0DUN
7DLZDQ
7DLZDQ&DUERQ
/DEHO
7DLZDQ
7DLZDQ(OHFWULFDO
DQG(OHFWURQLF
0DQXIDFWXUHUV
$VVRFLDWLRQ
7((0$
(OHFWURQLF6HFWRU
7KDLODQG
&DUERQ5HGXFWLRQ
/DEHO
$OO*RRGVDQG
6HUYLFHV
81)&&&&'0
7KDLODQG
&DUERQ)RRWSULQW
/DEHO
$OO*RRGVDQG
6HUYLFHV
81)&&&&'0
8QLWHG.LQJGRP
$%$JUD*+*
0RGHOLQJ
'DLU\
8QLWHG.LQJGRP
&DUERQ5HGXFWLRQ
/DEHO
8QLWHG6WDWHV
&HUWLILHG&DUERQ
)UHH
8QLWHG6WDWHV
FRPSDQLHV
/&$
,62
3$6,62
/&$
3$6
$OO*RRGVDQG
6HUYLFHV
3$6
$OO*RRGVDQG
6HUYLFHV
/&$
&OLPDWH&RQVFLRXV
&DUERQ/DEHO
$OO*RRGVDQG
6HUYLFHV
/&$
8QLWHG6WDWHV
)RRWSULQW
&KURQLFOHV
&ORWKLQJDQG
)RRWZHDU
/&$
8QLWHG6WDWHV
*UHHQ,QGH[5DWLQJ
)RRWZHDU
0RGHOV
/&$
6RXUFH$XWKRU¶VRZQUHVHDUFKDQG%ROZLJ6LPRQDQG3HWHU*LEERQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
)
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
+DUPRQL]LQJPHWKRGRORJLHVDQGVWDQGDUGV
7KHUHDUHVLJQLILFDQWFKDOOHQJHVWRKDUPRQL]LQJWKHPHWKRGRORJLHVGHYHORSHGWRPHDVXUHFDUERQFRQWHQW
LQ SURGXFWV DQG VHUYLFHV DQG LQ FUHDWLQJ D XQLYHUVDOO\ DFFHSWHG VHW RI SUDFWLFHV DQG VWDQGDUGV IRU WKH
FDUERQ DFFRXQWLQJ FHUWLILFDWLRQ FRPSDQLHV 6RPH RI WKH PHWKRGRORJLHV GHVFULEHG DERYH DUH
LQFRPSDWLEOHZLWKHDFKRWKHUEHFDXVHRIWKHLUVSHFLILHGERXQGDULHV$OVRFRPSDQLHVQHHGWREHDEOHWR
DSSO\DPHWKRGRORJ\WKDWLVUHOHYDQWWRWKHLUVSHFLILFSURGXFWUHJLRQDQGFRQVXPHUPDUNHWDOORIZKLFK
KDYH SDUWLFXODU UHTXLUHPHQWV 3ULYDWH DQG JRYHUQPHQWVXSSRUWHG LQLWLDWLYHV ODFN D JRYHUQLQJ VWDQGDUG
DQG PHWKRGRORJ\ PDNLQJ LW GLIILFXOW IRU FXVWRPHUV WR FRPSDUH SURGXFWV DQG LQFUHDVLQJ WKH FRVW WR
SURGXFHUV RI FHUWLI\LQJ SURGXFWV 7KRXJK PDQ\ EDVH WKHPVHOYHV RQ HLWKHU WKH ,62 RU WKH 3$6
PHWKRGRORJLHVWKH\DUHXVXDOO\DGDSWHGWRWKHLQGLYLGXDOFRXQWU\¶VUHDOLWLHV
7KHUH LV DOVR D QHHG WR HVWDEOLVK D VWDQGDUG RI SUDFWLFHV DQG FHUWLILFDWLRQ IRU WKH FHUWLI\LQJ
DJHQFLHV WKHPVHOYHV ZKR DUH WKH RQHV WR LPSOHPHQW WKH HVWDEOLVKHG PHWKRGRORJLHV 7KHVH DJHQFLHV
VKRXOGDOVREHSDUWRIDGDWDFROOHFWLRQHIIRUWWRLGHQWLI\SUREOHPVLQWKHPHDVXUHPHQWDQGFHUWLILFDWLRQ
RI FDUERQ FRQWHQW DFURVV SURGXFWV DQG FRXQWULHV $OO RI WKLV ZRXOG JR D ORQJ ZD\ WRZDUGV LPSURYLQJ
WUDQVSDUHQF\ IRU FRQVXPHUV DQG PRUH LPSRUWDQWO\ WR WKH FRPSDQLHV WKDW UHO\ RQ WKHVH PHWKRGRORJLHV
DQGSUDFWLFHVWRLGHQWLI\DUHDVIRULPSURYHPHQWLQWKHLUSURGXFWLRQSURFHVVHV
2UJDQL]DWLRQVDQGJRYHUQPHQWVUHFRJQL]HWKHQHHGIRUDKDUPRQL]HGV\VWHPRIFDUERQDFFRXQWLQJ
WKDWDYRLGVWKHSLWIDOOVRIWKHFXUUHQWO\IUDJPHQWHGV\VWHP7KH(XURSHDQ&RPPLVVLRQ)UDQFHDQGWKH8.
DUHDOODFWLYHO\GHYHORSLQJPHWKRGRORJLHVDQGWKHUHJXODWRU\IUDPHZRUNUHTXLUHGIRUQDWLRQDODQGUHJLRQDO
FDUERQDFFRXQWLQJPHFKDQLVPV7KHJRDOVDUHWRKDUPRQL]HWKHSURFHVVHVWRDOORZIRUFRPSDUDELOLW\DFURVV
VLPLODUSURGXFWVDQGWRSURYLGHSURGXFHUVZLWKXVHIXOLQIRUPDWLRQDERXWWKHHQYLURQPHQWDOLPSDFWRIWKHLU
LQSXWV7KHHIIRUWVLQWKH8.VHH3$66WDQGDUGIRUH[DPSOHDUHEHLQJGHVLJQHGWRLQIRUPSROLF\
7KHVHDUHQRWH[SHFWHGWREHXVHGLQDFRQVXPHUODEHOLQJPDQGDWHLQWKHQHDUWHUP7KLVDSSURDFKDYRLGV
WKHGDXQWLQJWDVNRIUHJXODWLQJWKHDFFRXQWLQJDQGODEHOLQJRILQGLYLGXDOSURGXFWVRSWLQJLQVWHDGWRIRFXV
RQWKHSURGXFWLRQFKDLQDVDZD\WRDFKLHYHXQLYHUVDOODEHOLQJ
7KH(XURSHDQ&RPPXQLW\KDVIXQGHGDVWXG\WRUHYLHZYDULRXVVWDQGDUGVDQGPHWKRGRORJLHVIRU
FDUERQ ODEHOLQJ 7KH JRDO LV WR KDUPRQL]H WKH YDULRXV VWDQGDUGV LQVLGH WKH (XURSHDQ 8QLRQ DV ZHOO DV
DURXQGWKHZRUOG/H*RII7KH&RPPXQLW\KDYHUHOHDVHGDUHSRUWWKDWLGHQWLILHVDQDO\VHVDQG
FRPSDUHV WKH H[LVWLQJ PDMRU PHWKRGRORJLHV DQG LQLWLDWLYHV LQ WKH ILHOG RI SURGXFW FDUERQ IRRWSULQWLQJ
(UQVW<RXQJDQG4XDQWLV
*
&DUERQDFFRXQWLQJLQDJULFXOWXUDOJRRGV
0HWKRGRORJLHVWRPHDVXUHHPLVVLRQVWKURXJKRXWWKHSURGXFWLRQVXSSO\FKDLQRIDJULFXOWXUDOJRRGVYDU\
JUHDWO\7KHEXONRISULYDWHODEHOLQJKDVIRFXVHGRQIRRGVWXIIVDVWKHDYDLODELOLW\RIVWXGLHVRQLQGXVWULDO
SURGXFWVLVUDWKHUOLPLWHGGXHWRWKHFRPSOH[LW\RIWKHLUVXSSO\FKDLQV3DXO%UHQWRQ*DUHWK(GZDUGV
-RQHVDQG0)-HQVHQS$VVXFKWKHPDMRULW\RIWKHOLWHUDWXUHDQGODEHOLQJLQLWLDWLYHVWKXV
IDUKDYHIRFXVHGRQDJULFXOWXUDOJRRGV
7KH REMHFWLYH RI FDUERQ DFFRXQWLQJ DQG ODEHOLQJ LV WR HQFRXUDJH WKH SXUFKDVH RI WKH OHDVW
GHWULPHQWDOIRUPRIRQIDUPIRRGSURGXFWLRQDQGWROLPLWWKHHPLVVLRQVUHVXOWLQJIURPWKHHQWLUHVXSSO\
FKDLQ (PLVVLRQ LQWHQVLWLHV FDQ YDU\ DW QHLJKERULQJ IDUPV WKDW XVH GLIIHUHQW DJURQRPLFDO SUDFWLFHV WR
VXSSO\QHDUO\LGHQWLFDOSURGXFWV(PLVVLRQLQWHQVLWLHVDOVRYDU\WKURXJKRXWWKHVXSSO\FKDLQGHSHQGLQJ
RQQXPHURXVIDFWRUVVXFKDVDSURGXFW¶VYDOXHDGGHGSDFNDJLQJRUPRGHRIWUDQVSRUW
:LWK UHJDUG WR WKH SK\VLFDO SRLQW RI SURGXFWLRQ WKH HPERGLHG FDUERQ RI D SURGXFW FDQ YDU\
JUHDWO\ )RU LQVWDQFHIHUWLOL]HULPSRUWHGIURPDFRXQWU\ ZKRVHHOHFWULFLW\JHQHUDWLRQLVODUJHO\GHULYHG
IURPUHQHZDEOHHQHUJ\ZRXOGFRQWDLQOHVVHPERGLHGFDUERQWKDQDFRXQWU\WKDWGHULYHVWKHEXONRIWKHLU
HOHFWULFLW\IURPFRDO3DXO%UHQWRQ*DUHWK(GZDUGV-RQHVDQG0)-HQVHQS
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
2WKHU SUREOHPDWLF LVVXHV LQFOXGH WKH OHYHO RI GHQLWULILFDWLRQ WKDW RFFXUV LQ IHUWLOL]HU WLPLQJ DQG
SODFHPHQWWKURXJKELRORJLFDODFWLYLW\WKHDPRXQWRIIHUWLOL]HUWKDWLVFRQYHUWHGIURPDSODQWXVDEOHIRUP
WR 12; JDVHV ZKLFK KDYH ODUJH *+* ZDUPLQJ SRWHQWLDOV WKURXJK DQDHURELF UHVSLUDWLRQ 0RVLHU
7KLVSKHQRPHQRQLVQHDUO\LPSRVVLEOHWRTXDQWLI\DWWKHLQGLYLGXDOILHOGOHYHODQGLVRQHRIWKH
ODUJHUDJULFXOWXUDO*+*HPLVVLRQV,QWKHSURGXFWLRQRIPHDWGDLU\DQGSRXOWU\WKHW\SHRIIHHGJUDVV
YVJUDLQDQGWKHRULJLQDWLRQRIWKHIHHGVRXUFHLWVHOIIRULQVWDQFHLPSRUWHGYHUVXVGRPHVWLFZLOOKDYHD
ODUJHHIIHFWRQWKHHPERGLHGFDUERQRIWKHILQDOSURGXFW
7KH FKRLFH RI PHWKRGRORJ\ XVHG WR FRPSXWH WKH FDUERQ IRRWSULQW RI D SURGXFW FDQ KDYH D
VLJQLILFDQW LPSDFW RQ WKH FRPSHWLWLYHQHVV RI WKH UHJLRQ¶V H[SRUWV )RU H[DPSOH XVLQJ ERXQGDULHV WKDW
H[FOXGH FDSLWDO JRRGV LQ FDUERQ ODEHOLQJ VXFK DV WUDFWRUV DQG RWKHU HTXLSPHQW DQG WKH UHVXOWLQJ
HPLVVLRQVIURPWKHLUSURGXFWLRQPD\KDYHQHJDWLYHLPSOLFDWLRQVIRUORZLQFRPHFRXQWULHV/RZLQFRPH
FRXQWULHV WHQG WR EH OHVV IHUWLOL]HU DJURFKHPLFDO DQG FDSLWDO HTXLSPHQWLQWHQVLYH DQG LQ VRPH
LQVWDQFHV VWLOO HPSOR\ OLYHVWRFN IRUDJULFXOWXUDO WDVNV 3DXO %UHQWRQ*DUHWK(GZDUGV-RQHV DQG 0 )
-HQVHQS
0LQRUGHWDLOVVXFKDVZRUNHUV¶ PRGHRI WUDQVSRUW WRDQGIURPZRUN LILQFOXGHGLQ WKHFDOFXODWLRQ
PHWKRGRORJLHVFDQKDYHLPSOLFDWLRQVIRUH[SRUWFRPSHWLWLYHQHVV7KHLQYROYHPHQWRI/$&FRXQWULHVLQWKH
VWDQGDUGVHWWLQJDQGPHWKRGRORJ\LVXUJHQWLQRUGHUWRDVVXUHWKHVHLPSRUWDQWGHWDLOVDUHDFFRXQWHGIRU
,IDQLQGXVWU\DYHUDJHDSSURDFKLVWREHXVHGLQFDUERQIRRWSULQWLQJPHWKRGRORJLHVWKHRQXVRI
GLIIHUHQWLDWLRQZLOOIDOORQWKHHQYLURQPHQWDOO\FRQVFLRXVSURGXFHUZKRGHFLGHVWRDGRSWQHZWHFKQRORJ\
DQGHQYLURQPHQWDOO\IULHQGO\SUDFWLFHV7KHORZHUFDUERQODEHOZRXOGQHHGWREHPHDVXUHGDWWKHIDUP
OHYHODYLUWXDOO\LPSRVVLEOHWDVNZLWKRXWUHOLDEOHGDWDWHFKQLFDONQRZKRZDQGVFLHQWLILFDFFXUDF\7KH
DFFRXQWLQJ WDVN IRU D SURGXFHU WR VHSDUDWH KLPKHUVHOI IURP RWKHU PHWKRGV RI SURGXFWLRQ LQ RUGHU WR
DFKLHYHWKHSUHPLXPWKDWPD\FRLQFLGHZLWKDORZHUFDUERQIRRWSULQWPD\EHRYHUZKHOPLQJ7KHFRVWV
RI PRQLWRULQJ DQG YHULILFDWLRQ PD\ OLNHO\ VXUSDVV WKH REWDLQHG SUHPLXP DQG WKXV WKH OLNHOLKRRG RI D
SURGXFHU DGRSWLQJ DQ HQYLURQPHQWDOO\ IULHQGOLHU SUDFWLFH PD\ GHFUHDVH ZLWK WKH LQFUHDVHG FRVWV RI
FDUERQDFFRXQWLQJ
(PLVVLRQ DFFRXQWLQJ EHJDQ ZLWK D IRFXV RQ DJULFXOWXUDO JRRGV EXW KDV HYROYHG WR HVWLPDWH DQG
FDOFXODWH HPLVVLRQV IURP PDQXIDFWXUHG JRRGV ZLWK LQFUHDVLQJ OHYHOV RI SURFHVVLQJ 7KH IROORZLQJ
VWDQGDUGVDGGUHVVQRWRQO\DJULFXOWXUDOJRRGVEXWDOVRPDQXIDFWXUHGSURGXFWV
$QDHURELFUHVSLUDWLRQRFFXUVZKHQPLFURRUJDQLVPVZLWKLQVRLOVDUHGHYRLGRIR[\JHQGXHWRIORRGLQJRUSHULRGVRIVRLOZDWHUORJDQG
XVHQLWURJHQIHUWLOL]HUVLQWKHILQDOVWDJHRIUHVSLUDWLRQRUUHVSLUDWRU\F\FOHFRQYHUWLQJWKHPWR12;JDVHV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
,9 &RQIOLFWVDQGFKDOOHQJHV
$
7UDGHGLYHUVLRQ
*UHDWHULQIRUPDWLRQRQWKHHPLVVLRQVDVVRFLDWHGZLWKSURGXFWLRQRIJRRGV
DLPV WR FKDQJH SURGXFWLRQ DQG FRQVXPSWLRQ SDWWHUQV DURXQG WKH ZRUOG
0XFKRIWKHGULYHIRUJUHDWHUFDUERQHPLVVLRQVDFFRXQWLQJFRPHVIURPWKH
IHDU RI ³FDUERQ OHDNDJH´ RU WKH LQFUHDVH RI FDUERQ HPLVVLRQV LQ
GHYHORSLQJHFRQRPLHVGXHWRRXWVRXUFLQJRUUHORFDWLRQRISURGXFWLRQIURP
LQGXVWULDOL]HG HFRQRPLHV 7KLV ZRXOG DOVR UHVXOW LQ FKDQJHV WR WUDGH
SDWWHUQV DV PRUH HIILFLHQW FRPSHWLWRUV ZRXOG JDLQ DW WKH H[SHQVH RI
LQHIILFLHQWSURGXFHUV
7KLVGLYHUVLRQRIWUDGHFRXOGUHVXOWLQVLJQLILFDQWKDUPWRSURGXFHUVLQ
WKHSRRUHVWRIFRXQWULHVDQGZKRVHLQHIILFLHQF\LVPHUHO\DUHVXOWRIQDWLRQDO
FRQGLWLRQV$³GLUW\´QDWLRQDOHQHUJ\PDWUL[ZRXOGEHDIRUPRI³RULJLQDOVLQ´
WR D FRXQWU\¶V H[SRUWHUV DQG D QDWLRQDO HFRQRP\ GHSHQGHQW RQ QDWXUDO
UHVRXUFHVDVLVWKHFDVHIRUPDQ\GHYHORSLQJHFRQRPLHVZRXOGEHSHQDOL]HG
IRU LWV LPSDFWRQ VRLODQGZDWHU UHVRXUFHV([SRUWRULHQWHGSURGXFHUV ZRXOG
DOVRQHHGWRLPSOHPHQWH[SHQVLYH/LIHF\FOH$QDO\VLV/&$PHWKRGVWKDWDUH
H[SHQVLYHDQGDQDGGLWLRQDOEXUGHQ0DF*UHJRU
%
%LDVLQ3&)PHWKRGRORJLHV
3URGXFW&DUERQ)RRWSULQWPHWKRGRORJLHVPXVWVSHFLI\LWVERXQGDULHVDQG
RWKHU SDUDPHWHUV ZKLFK QHFHVVDULO\ LQWURGXFHV VRPH ELDV )RU WKH UHDVRQ
WKDW FDUERQ ODEHOV KDYH WKXV IDU ODUJHO\ IRFXVHG RQ DJULFXOWXUDO JRRGV
FRXQWULHV DQG UHJLRQV ZKRVH H[SRUWV GHSHQG PRUH KHDYLO\ RQ DJULFXOWXUD
²VXFKDVLQWKH/DWLQ$PHULFDDQGWKH&DULEEHDQ/$&UHJLRQ²DUHDWD
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
GLVDGYDQWDJHFRPSDUHGWRGRPHVWLFSURGXFHUV7KHGLIIHUHQFHLQWKHFRPSOH[LWLHVRIVXSSO\FKDLQVIRU
PDQXIDFWXUHGJRRGVFRPSDUHGWRDJULFXOWXUDOJRRGVPD\KDYHELDVHGWKHLQLWLDOLQWURGXFWLRQRIFDUERQ
ODEHOVZKLFKLQLWLDOO\IRFXVHGRQWKHSURGXFWVLQZKLFKWKHFRQGXFWLQJRI/&$VDQG3&)VZDVUHODWLYHO\
VLPSOH=DLQR7KLVELDVPD\KDYHDOUHDG\DIIHFWHG/$&H[SRUWVJLYHQWKDWVRPHRIWKHZRUOG¶V
ODUJHVWUHWDLOHUVDUHFXUUHQWO\UHTXLULQJFDUERQODEHOVIRUDJULFXOWXUDOSURGXFWV
7KHLQFOXVLRQRIODQGXVHFKDQJHZLWKLQ3&)PHWKRGRORJLHVVXFKDV3$6DQGRWKHUVPD\
DOVRLQWURGXFHDELDVLQIDYRURIGHYHORSHGFRXQWULHVWKDWKDYHFRQYHUWHGKLVWRULFDOQDWXUDOYHJHWDWLRQWR
FURSODQG LQ WKH SDVW ,Q WKH FDVH RI FRXQWULHV ZLWKLQ WKH WURSLFV WKH ODQG XVH FKDQJH KDV D VXEVWDQWLDO
LPSDFW RQ WKH 3&) 7KH FDUERQ FRQWHQW RI FKDQJLQJ IRUHVWV DOVR KDV D ODUJH SRWHQWLDO IRU HUURU IRU
H[DPSOH GHFLGXRXV IRUHVWV DQG WURSLFDO IRUHVWV GLIIHU JUHDWO\ LQ FDUERQ FRQWHQW &XUUHQWO\ WKH
,QWHUJRYHUQPHQWDO3DQHORQ&OLPDWH&KDQJHJXLGHOLQHVIRUODQGXVHFKDQJHLQFOXGHZRUVWFDVHVFHQDULRV
DQGPD\OHDGWRRYHUHVWLPDWLRQRIHPLVVLRQV3ODVVPDQQHWDO
$QRWKHU ELDV WKDW PD\ QHJDWLYHO\ DIIHFW /$& H[SRUWV LQFOXGHV WKH H[FOXVLRQ RI WKH FDUERQ
VHTXHVWUDWLRQ SRWHQWLDO RI SHUHQQLDO DJURIRUHVWU\ FURSV VXFK DV FRIIHH DQG FRFRD WZR SURPLQHQW FURSV
ZLWKLQ WKH /$& UHJLRQ 3ODVVPDQQ HW DO 6HTXHVWUDWLRQ UHIHUV WR WKH DELOLW\ RI SODQWV WR DEVRUE
DQGVWRUHFDUERQWKURXJKELRORJLFDOSURFHVVHVDQGLQVRPHFRXQWULHVFDUERQVLQNVDUHDOORZHGLQRIIVHW
DQGDEDWHPHQWVFKHPHV6KRXOGVHTXHVWUDWLRQEHLQFOXGHGLQIXWXUH3&)VWDQGDUGVWKHHPEHGGHGFDUERQ
RI/$&H[SRUWVPD\EHIDYRUDEO\UHGXFHGLQWKHVHLPSRUWDQWVHFWRUV
$VLJQLILFDQWLVVXHIRUWKH/DWLQ$PHULFDDQGWKH&DULEEHDQUHJLRQLVWKDWLWLVQRWSDUWLFLSDWLQJLQ
WKH GHVLJQ DQG KDUPRQL]DWLRQ RI DOO WKHVH VWDQGDUGV DQG WKHLU XVH DQG UHTXLUHPHQW E\ LPSRUWHUV ZLOO EH
QHJRWLDWHGVROHO\RQWKHSULYDWHVHFWRUZKHUHODUJHEX\HUVPD\EHDEOHWRGLFWDWHWKHPHWKRGRORJ\XVHG
7KLVLVRIFRXUVHDJRDORIWKHV\VWHPHQFRXUDJHFRPSDQLHVWREHEHWWHULQIRUPHGRIWKHFDUERQFRQWHQWRI
WKHLUSURGXFWLRQFKDLQDQGWKXVIRUFHWKHLUUHTXLUHPHQWVRQWRSURGXFWLRQVWDQGDUGV+RZHYHUWKHODFNRI
YRLFHIURPGHYHORSLQJFRXQWULHVDQG /DWLQ$PHULFDDQGWKH&DULEEHDQLQSDUWLFXODUUHJDUGLQJWHFKQLFDO
PHWKRGRORJLFDO LVVXHV LV RI JUHDW FRQFHUQ WR LWV H[SRUWHUV /DWLQ $PHULFDQ DQG &DULEEHDQ SROLF\ PDNHUV
DQG LQGXVWU\ UHSUHVHQWDWLYHV PXVW EH SUHSDUHG IRU WKLV LVVXH DV WKH LPSOLFDWLRQV IRU H[SRUWV WHFKQLFDO
FDSDFLW\IRUPRQLWRULQJYHULILFDWLRQDQGLPSOHPHQWDWLRQPD\EHFRPHLQVXUPRXQWDEOH
&
7KH:72DQGSULYDWHODEHOLQJVFKHPHV
:KDWHYHU PXOWLODWHUDO IUDPHZRUN HPHUJHV IRU GHDOLQJ ZLWK &OLPDWH &KDQJH LW PXVW UHVSHFW WKH EDVLF
SULQFLSOHVHVWDEOLVKHGXQGHUWKH:72DQGRWKHULQWHUQDWLRQDODJUHHPHQWV )RUH[DPSOHZLWKUHVSHFWWR
QDWLRQDO UXOHV RQ SURGXFW FKDUDFWHULVWLFV ²VXFK DV UHTXLUHPHQWV UHODWLQJ WR HQHUJ\ HIILFLHQF\ *+*
HPLVVLRQVRUODEHOLQJUXOHV²LWLVQRW\HWFOHDUZKHWKHU:72DOORZVGLVWLQFWLRQVWREHPDGHRQWKHEDVLVRI
WKHSURGXFWLRQSURFHVVUDWKHUWKDQWKHVSHFLILFDWLRQVRIWKHSURGXFWLWVHOI3URGXFWLRQSURFHVVDQGHPLVVLRQ
ERXQGDULHVVHWRXWZLWKLQ3&)VWDQGDUGVZLOOEHDQHZIURQWLHUWKDWPD\VRRQEHWHVWHGDWWKH:72
$ GLVWLQFWLRQ PXVW EH PDGH KRZHYHU E\ JRYHUQPHQW ODEHOLQJ UHTXLUHPHQWV DQG SULYDWH
LQLWLDWLYHV ,QFUHDVLQJO\ ODEHOLQJ DQG FDUERQ DFFRXQWLQJ LV EHLQJ XVHG E\ WKH SULYDWH VHFWRU WR LGHQWLI\
LQHIILFLHQFLHVDQGJDLQDEHWWHUHQYLURQPHQWDOLPDJH7KHDFWLRQRIJRYHUQPHQWVVHHPVWREHOLPLWHGWR
GHYHORSLQJVWDQGDUGVDQGPHWKRGRORJLHVSURYLGLQJLQIRUPDWLRQDQGFDSDFLW\EXLOGLQJWRSURGXFHUV7KLV
PDUNHWOHGSXVKLVQRWOLNHO\WREHDFWLRQDEOHXQGHUH[LVWLQJDJUHHPHQWV
7KH YROXQWDU\ DQG SULYDWH QDWXUH RI WKH ODEHOLQJ UHTXLUHPHQWV FUHDWHV D FKDOOHQJH VLQFH
JRYHUQPHQWV DUH DFWLYHO\ HQFRXUDJLQJ FRPSDQLHV WR UHGXFH HPLVVLRQV LQ WKHLU DFWLYLWLHV ZKLFK ZLOO
LQHYLWDEO\DIIHFWLQWHUQDWLRQDOVXSSOLHUV+RZHYHUVLQFHWKHVHDUHQRWPDQGDWRU\SUDFWLFHVLWLVGLIILFXOW
:KLOHLWLVWUXHWKDWLIWKHUHTXLUHPHQWVDUHDSSOLHGXQLYHUVDOO\DJULFXOWXUDOH[SRUWVZLOOXQLYHUVDOO\VXIIHUDQGWKHFRPSHWLWLRQHIIHFWV
ZLWKLQWKLVVHFWRUZLOOEHQHJDWHGFRXQWULHVWKDWGHSHQGRQDJULFXOWXUHIRUDVLJQLILFDQWSRUWLRQRIWKHLULQFRPHZLOOVXIIHULQDQDEVROXWH
VHQVH DV SURILWDELOLW\ DQG WKXV ZDJHV DQG HPSOR\PHQW GHFOLQH ,Q DGGLWLRQ XQGHU FHUWDLQ FRQGLWLRQV WKH H[SRUWV IURP GHYHORSLQJ
HFRQRPLHVPD\EHOHVVLQWHQVLYHLQFDUERQHPLVVLRQVWKDQDJULFXOWXUDOSURGXFWVIURPLQGXVWULDOL]HGHFRQRPLHVDVVKRZQDERYH
$PRUHGHWDLOHGDQDO\VLVRIWKHLQWHUDFWLRQEHWZHHQ:72UXOHVDQGFOLPDWHFKDQJHPHDVXUHVFDQEHIRXQGLQ(&/$&S
6HH/RZ0DUFHDXDQG5HLQDXGIRUDGLVFXVVLRQRIWKHLQWHUDFWLRQEHWZHHQ:72UXOHVDQGQDWLRQDOHQYLURQPHQWDOSROLFLHV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
WRUHVROYHWKHLVVXHRIZKHWKHUJRYHUQPHQWVWKDWHQFRXUDJHGRPHVWLFILUPVWRDGRSWWKHPDUHLQFRQIOLFW
ZLWK WKH :72 DJUHHPHQW RQ 7HFKQLFDO %DUULHUV WR 7UDGH 7%7 %ODQGIRUG DQG-RVOLQJ S 7KH :72 $JUHHPHQW RQ 7HFKQLFDO %DUULHUV WR 7UDGH UHTXLUHV WKDW PDQGDWRU\ WHFKQLFDO UHJXODWLRQV
LPSRVHG E\ FHQWUDO JRYHUQPHQWV LQFOXGLQJ ODEHOLQJ VFKHPHV QRW EH PRUH WUDGHUHVWULFWLYH WKDQ
QHFHVVDU\WRIXOILOODOHJLWLPDWHREMHFWLYHVXFKDVSURWHFWLRQRIWKHHQYLURQPHQW+RZHYHULQWKHFDVHRI
YROXQWDU\SULYDWHVWDQGDUGVVXFKDVWKHFDUERQODEHOLQJVFKHPHVXVHGE\DJURZLQJQXPEHURIILUPVLQ
GHYHORSHG FRXQWULHV WKLV REOLJDWLRQ LV QRW ELQGLQJ *RYHUQPHQWV DUH UHTXLUHG LQVWHDG WR ³WDNH VXFK
UHDVRQDEOH PHDVXUHV DV PD\ EH DYDLODEOH´ WR HQVXUH WKDW SULYDWH VWDQGDUGL]LQJ ERGLHV DFW FRQVLVWHQWO\
ZLWK WKH SURYLVLRQV RI WKH 7%7 $JUHHPHQW LQFOXGLQJ RQ QRQGLVFULPLQDWLRQ 7KXV ZKLOH WKH :72
GLVSXWHVHWWOHPHQWPHFKDQLVPFDQEHXVHGWRHQIRUFHWKHSURYLVLRQVRIWKH7%7$JUHHPHQWLQWKHFDVHRI
PDQGDWRU\WHFKQLFDOUHJXODWLRQVWKLVSRVVLELOLW\GRHVQRWH[LVWIRUYROXQWDU\SULYDWHVWDQGDUGVDQGLWLV
QRW FOHDU KRZ D GLVSXWH RQ WKLV EDVLV ZRXOG EH EURXJKW ,Q DGGLWLRQ JRYHUQPHQW DFWLRQV WR UHTXLUH
XVHFRPSOLDQFHZLWKVXFKODEHOVLQGRPHVWLFRULPSRUWHGSURGXFWVPD\EHFKDOOHQJHG&RWWLHU1DUWRYD
DQG%LJGHOLS%ODQGIRUGDQG-RVOLQJ
$Q DGGLWLRQDO FRPSOLFDWLQJ IDFWRU LV WKH GLYLGLQJ OLQH EHWZHHQ SURFHVV RU SURGXFW PHWKRGV
330V WKDW KDYH D SK\VLFDO LPSDFW RQ WKH SURGXFW LWVHOI ³SURGXFW UHODWHG´ DQG WKRVH WKDW KDYH QR
SK\VLFDO LPSDFW RQ WKH SURGXFW LWVHOI ³QRQSURGXFWUHODWHG´ :72 PHPEHUV KDYH DUJXHG WKDW QRQ
SURGXFWUHODWHG330UHJXODWLRQVDUHQRWVXEMHFWWRWKH7%7SURYLVLRQVDQGWKXVH[FOXGHWKHPIURPWKH
UHTXLUHPHQWVRIQRWLILFDWLRQKDUPRQL]DWLRQDQGPXWXDOUHFRJQLWLRQWKDWH[LVWLQWKH7%7DJUHHPHQW
,W ZRXOG VHHP LQHIILFLHQW LI SURGXFWUHODWHG 330 WHFKQLFDO UHJXODWLRQV ZHUH VXEMHFW WR WKH
PRUHVWULQJHQWUHTXLUHPHQWVRIWKH7%7$JUHHPHQWZKLOHWKHOHVVWUDQVSDUHQWQRQSURGXFW
UHODWHG330WHFKQLFDOUHJXODWLRQV²SRVVLEO\MXVWLILDEOHXQGHU$UWLFOH;;RI*$77²ZHUH
QRW:KHWKHUQRQSURGXFWUHODWHG330UHJXODWLRQVJHQHUDOO\DUHLQFOXGHGLQWKHGHILQLWLRQRI
WHFKQLFDO UHJXODWLRQVGHSHQGVRQKRZRQHUHDGV FKDUDFWHULVWLFVRI WKHSURGXFWVDQG WKHLU
UHODWHG SURFHVV DQG SURGXFWLRQ PHWKRGV 7KH FRPSHWLWLYH QDWXUH DQG FDSDFLW\ RI SURGXFWV
VXUHO\FRQVWLWXWHFKDUDFWHULVWLFVRIWKHVDPHSURGXFWV2QWKHRWKHUKDQGWKH7RN\R5RXQG
6WDQGDUGV&RGHPDGHDQH[SOLFLWGLVWLQFWLRQLQ$UWLFOHLQDOORZLQJFKDOOHQJHVDJDLQVW
µGUDIWLQJ UHTXLUHPHQWV LQ WHUPV RI SURFHVVHV DQG SURGXFWLRQ UDWKHU WKDQ LQ WHUPV RI
FKDUDFWHULVWLFVRISURGXFWV¶/RZ0DUFHDXDQG5HLQDXGS
*LYHQ WKH JURZLQJ LPSRUWDQFH RI SULYDWH VWDQGDUGV WKH UHJLRQ¶V JRYHUQPHQWV VKRXOG SURPRWH
FRPSOLDQFHE\DOO:72PHPEHUVZLWKWKH7%7$JUHHPHQW¶V&RGHRI*RRG3UDFWLFHIRUWKH3UHSDUDWLRQ
$GRSWLRQDQG$SSOLFDWLRQRI6WDQGDUGVLQFOXGLQJE\LQFUHDVLQJWUDQVSDUHQF\DERXWQHZLQLWLDWLYHV,WLV
FOHDU WKDW WKH DWWUDFWLYHQHVV RI YROXQWDU\ ODEHOV LV WKDW WKH\ FDQ EH WDLORUHG WR WKH QHHGV RI D VXEVHW RI
FRQVXPHUV DQG SURGXFHUV LQ OLHX RI PRUH LQWUXVLYH JRYHUQPHQW SROLFLHV +RZHYHUD OHJDO VWUXFWXUH LV
QHHGHGWRHQVXUHWKDWVXFKODEHOLQJXVHGRHVQRWUHVXOWLQEDUULHUVWRWUDGH
(IIRUWVDUHXQGHUZD\WRKDUPRQL]HWKHPDLQFDUERQIRRWSULQWFDOFXODWLRQPHWKRGRORJLHVDQGUHDFK
DQDJUHHPHQWRQDVWDQGDUGZKLFKLVIDLUHIILFLHQWDQGWUDQVSDUHQW)RU/DWLQ$PHULFDDQGWKH&DULEEHDQ
WKHRXWFRPHRIWKRVHHIIRUWVLVYHU\LPSRUWDQW'HSHQGLQJRQWKHPHWKRGRORJ\WKDWLVHYHQWXDOO\IDYRUHG
WKHUHJLRQ¶VH[SRUWVPD\ZLQRUORVHFRPSHWLWLYHQHVVYLVjYLVWKRVHIURPRWKHUUHJLRQV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
9 ,PSOLFDWLRQVIRU/DWLQ$PHULFD
DQGWKH&DULEEHDQ
7KH PDLQ GHVWLQDWLRQ PDUNHWV IRU H[SRUWV IURP /DWLQ $PHULFD DQG WKH
&DULEEHDQ RYHU DUH DOVR WKRVH FRXQWULHV WKDW DUH PRVW LQWHUHVWHG LQ
PHDVXULQJ WKH HPEHGGHG FDUERQ FRQWHQW LQ SURGXFWV DQG VHUYLFHV WKH
8QLWHG 6WDWHV DQG WKH (XURSHDQ 8QLRQ $V PXOWLODWHUDO QHJRWLDWLRQV RQ
FOLPDWH FKDQJH EHFRPH PRUH FRPSOLFDWHG WKH XQLODWHUDO DFWLRQV RI
GHYHORSHG QDWLRQV KDYH WKH SRWHQWLDO WR GHFUHDVH WKH FRPSHWLWLYHQHVV RI
H[SRUWV IURP WKRVH FRXQWULHV WKDW IDLO WR PLWLJDWH WKHLU HPLVVLRQV ,Q WKH
IXWXUHFDUERQODEHOLQJZKHWKHUWKURXJKSULYDWHLQLWLDWLYHVRUOHJLVODWHGE\
QDWLRQDOJRYHUQPHQWVZLOODOPRVWFHUWDLQO\LQFUHDVHWKHFRVWRIH[SRUWVIURP
WKHUHJLRQ7KHHIIHFWZLOODOVRGHSHQGRQWKHW\SHRIFDUERQDFFRXQWLQJDQG
HVWLPDWLRQVHPSOR\HGE\IRUHLJQJRYHUQPHQWVGXULQJWKLVSURFHVV
,ISULYDWHODEHOLQJLQLWLDWLYHVH[WHQGWR/$&H[SRUWVDFFRXQWLQJIRU
WKHFDUERQFRQWHQWZLOOEHFRPHDFKDOOHQJHEHFDXVHRIWKHVWHHSOHDUQLQJ
FXUYH DQG WKH KLJK FRVWV DVVRFLDWHG ZLWK FROOHFWLQJ WKH QHFHVVDU\ GDWD
3DXO%UHQWRQ*DUHWK(GZDUGV-RQHVDQG0)-HQVHQS$
VXUYH\ RI WKUHH 3&) VFKHPH RSHUDWRUV E\ %ROZLJ DQG *LEERQ IRXQG WKH
/&$ RI D VLQJOH DJULFXOWXUDO SURGXFW WR UDQJH IURP ¼ WR ¼ DW
RQH RSHUDWRU WR D KLJK RI 86 DW WKH VHFRQG RSHUDWRU 7KH FRVWV
UDQJHG DV KLJK DV 86 IRU VRPH IRRG DQG PDQXIDFWXUHG SURGXFWV
IURP WKH WKLUG VFKHPH RSHUDWRU 7KH FRVWV GLIIHU GHSHQGLQJ RQ WKH
FRPSOH[LW\ RI WKH VXSSO\ FKDLQ DQG WKH HFRQRPLHV RI VFDOH %ROZLJ DQG
*LEERQ7KHFHUWLILFDWLRQDQG3&)DFFRXQWLQJFRVWVUHTXLUHIXUWKHU
UHVHDUFKEXWFHUWDLQO\WKUHDWHQDVSLNHLQFRVWVIRUVPDOO/$&SURGXFHUV
,W LV YHU\ GLIILFXOW WR HVWLPDWH ZLWK SUHFLVLRQ WKH DPRXQW RI WRWDO
/$& WUDGH DW ULVN GXH WR FDUERQUHODWHG UHTXLUHPHQWV LQ H[SRUW PDUNHWV
7KLV LV D FRQVHTXHQFH RI WKH ODUJH DQG JURZLQJ QXPEHU RI VXFK
UHTXLUHPHQWVRIWKHLUGLYHUVLW\LQWHUPVRIFRYHUDJHDQGPHWKRGRORJ\DQG
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
RIWKHIDFWWKDWLQIRUPDWLRQDERXWWKHPLVYHU\GLVSHUVHDQGWKHUHIRUHGLIILFXOWWRFROOHFW8QOHVVDQGXQWLO
WKHUHLVVRPHIRUPRI PXOWLODWHUDODJUHHPHQWWKDWVSHFLILHVKRZWKHFDUERQIRRWSULQWRIWUDGDEOHJRRGV
PXVW EH FDOFXODWHG DQ\ HVWLPDWH RI WKH SRWHQWLDO FRVW RI FDUERQUHODWHG UHTXLUHPHQWV ZLOO QHFHVVDULO\
KDYHWREHEDVHGRQJHQHUDODVVXPSWLRQV
$OVRWKLVIUDJPHQWDWLRQZLOOPHDQVLJQLILFDQWDGGLWLRQDOFRVWVIRUWKHUHJLRQ/DWLQ$PHULFDQDQG
&DULEEHDQ ILUPV H[SRUWLQJ WR PXOWLSOH FRXQWULHV ZRXOG KDYH WR PHHW GLIIHUHQW FDUERQ IRRWSULQWUHODWHG
UHTXLUHPHQWVWKXVLQFUHDVLQJWKHLUWUDQVDFWLRQFRVWV,QFUHDVHGODEHOLQJUHTXLUHPHQWVUHVXOWLQDJURZLQJ
GHPDQG IRU PHWKRGRORJLHV WR JXLGH DQG HQVXUH WKH FRPSDUDELOLW\ RI GDWD 3URGXFHUV LQ /DWLQ $PHULFD
DQG WKH &DULEEHDQ PXVW QDYLJDWH D IUDJPHQWHG V\VWHP RI UHTXLUHPHQWV DQG PHWKRGRORJLHV LQ WU\LQJ WR
H[SRUW WR LQGXVWULDOL]HG FRXQWULHV :LWKRXW D XQLIRUP VWDQGDUG SURGXFHUV ZLOO EH UHTXLUHG WR PHDVXUH
FDUERQHPLVVLRQVLQGLIIHUHQWZD\VGHSHQGLQJRQWKHFRXQWU\WKHEX\HUDQGWKHSURGXFW
7KLVSODFHVDODUJHEXUGHQRQH[SRUWHUVHVSHFLDOO\WKRVHZLWKRXWHFRQRPLHVRIVFDOH%ROZLJDQG
*LEERQ ZKR ZLOO EH OHVV DEOH WR DEVRUE WKH FRVW DQG WKXV ZLOO EHFRPH OHVV FRPSHWLWLYH 7KLV
SRVVLELOLW\UHLQIRUFHVWKHQHHGIRU/$&WRFDOOIRUDVLQJOHLQWHUQDWLRQDOVWDQGDUGLQRUGHUWRUHGXFHWKH
FRVWVIRUH[SRUWHUV
,Q DGGLWLRQ WR WKH SUREOHP RI KDYLQJ WR DGKHUH WR YDULRXV PHWKRGRORJLHV LV WKH SUREOHP RI
PHWKRGRORJLFDO FRQFHSWV2QH SDUWLFXODU SUREOHP FRQFHUQV WKH ERXQGDULHV RI D SURGXFW¶V OLIH F\FOH ,Q
SDUWLFXODUWKHUHJLRQPD\VXIIHUVLJQLILFDQWORVVRIFRPSHWLWLYHQHVVLIPHWKRGRORJLHVFRQWLQXHWRH[FOXGH
WKHFDUERQHPLVVLRQFRQWHQWRIFDSLWDOJRRGVXVHGLQWKHSURGXFWLRQRIDJULFXOWXUDOSURGXFWV:LWKRXWWKH
LQFOXVLRQRIWKHVHHPLVVLRQVODERULQWHQVLYHSURGXFWLRQWKDWRFFXUVZLWKLQ/$&PD\VXIIHUDQDUWLILFLDO
GLVDGYDQWDJHWRPRUHFDSLWDOLQWHQVLYHSURGXFWLRQV\VWHPV
/$&ZLOODOVRSD\DKLJKHUSULFHIRUWKHWUDQVSRUWDWLRQFRPSRQHQWRIFDUERQHPLVVLRQVLQLWVH[SRUWV
GXH WR LWV JHRJUDSKLFDO GLVWDQFH WR LQGXVWULDOL]HG PDUNHWV 6RPH RI WKH UHJLRQ¶V H[SRUWV FRQVLVW RI
SHULVKDEOHDJULFXOWXUDOJRRGVWKDWUHTXLUHDLUIUHLJKWWRUHDFKWKHLUGHVWLQDWLRQPDUNHWVLQDWLPHO\PDQQHU,Q
DKLJKO\FRPSHWLWLYHPDUNHWWKHDGGLWLRQDOFDUERQIRRWSULQWRIWUDQVSRUWLQJDSURGXFWE\DLURYHUDJUHDWHU
GLVWDQFH PD\ GHWHUPLQH ZLQQHUV DQG ORVHUV LQ VHOHFWHG PDUNHWV +RZHYHU LI WKH RSWLRQ WR WUDQVSRUW YLD
RFHDQIUHLJKWH[LVWVWKHHPLVVLRQLQWHQVLW\LVJUHDWO\UHGXFHGDQGUHVXOWVLQPXFKORZHUHPEHGGHGFDUERQ
FRQWHQW$OVRVRPHFDUERQODEHOVDQGFDUERQUHODWHGSURFXUHPHQWSUDFWLFHVRIVHYHUDOLPSRUWDQWUHWDLOHUVLQ
2(&' FRXQWULHV SODFH JUHDW HPSKDVLV RQ RQH SDUWLFXODU DVSHFW RI WKH FDUERQ IRRWSULQW WKH GLVWDQFH
WUDYHOOHGE\DSURGXFWWRUHDFKWKHFRQVXPHU7KLVLVGHVSLWHWKHIDFWWKDWVHYHUDOVWXGLHVVKRZWKDWWUDQVSRUW
LVQRWQHFHVVDULO\WKHPRVWLPSRUWDQWFRPSRQHQWRIWKHFDUERQIRRWSULQWRIDSURGXFW
,I WKH HIIHFW RI QHZ ODEHOOLQJ UHTXLUHPHQWV LV WKH UHGXFH GHPDQG IRU LPSRUWV SDUWLFXODUO\ LQ
DJULFXOWXUHIURPGHYHORSLQJFRXQWULHVWKHEXUGHQRIUHGXFLQJHPLVVLRQVZLOOEHSODFHGRQWRWKRVHOHDVW
UHVSRQVLEOHIRUWKHFXUUHQWSUREOHP6XFKDQRXWFRPHJRHVDJDLQVWWKH81FOLPDWHFKDQJHFRQYHQWLRQ¶V
UHFRJQLWLRQ RI JOREDO LQHTXLW\ LQ UHVSRQVLELOLW\ IRU GHDOLQJ ZLWK FOLPDWH FKDQJH DQG ZRXOG KDUP
GHYHORSPHQW JRDOV $V GHYHORSPHQW HIIRUWV SURPRWHG JUHDWHU QRQVXEVLVWDQFH DJULFXOWXUDO WUDGH WR
LQFUHDVH LQYHVWPHQW HGXFDWLRQ DQG LQFRPH OHYHOV PHDVXUHV WR OLPLW DFFHVV WR LQWHUQDWLRQDO PDUNHWV
ZRXOG GLUHFWO\ XQGHUPLQH WKHVH HIIRUWV 7KLV MXVWLILHV WKH QHHG IRU GLIIHUHQWLDWHG UHVSRQVLELOLWLHV IRU
GHYHORSHGDQGGHYHORSLQJQDWLRQV0DF*UHJRU
$
7UDGHLQJUHHQJRRGVDQGVHUYLFHV,VWKHUH
D³FDUERQGLYLGH´"
,QWHUQDWLRQDOWUDGHDFFRXQWVIRUQHDUO\DTXDUWHURIWRWDOJOREDOHPLVVLRQVRIJUHHQKRXVHJDVHV*+*V
PDNLQJLWKDUGWRLJQRUHWKHUROHRIFURVVERUGHUFRPPHUFLDOWUDQVDFWLRQVLQWKHHQYLURQPHQWDODJHQGD
1RQHWKHOHVV /DWLQ $PHULFD DQG WKH &DULEEHDQ FRQWULEXWHV RQO\ DERXW RI WRWDO H[SRUWUHODWHG
6HH%ROZLJDQG*LEERQIRUPRUHGHWDLOV
6HH6DXQGHUV%DUEHUDQG7D\ORU6DXQGHUV%DUEHUDQG6RUHQVRQ+RJDQDQG7KRUSH&KL0DF*UHJRUDQG.LQJ
:LOOLDPV:\QHQDQG9DQ]HWWL
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVX
XHVDQGLPSOLFDWLRQV«
HPLVVLRQV D VPDOOHU VKDUH WKDQ RWKHU UHJLRQV )LJXUH $ %UD]LO DQG 0H[LFR KDYH
K
WKH KLJKHVW
DPRXQWVRIWRWDO*+*VHPLVVLRQVHPEHGGHGLQH[SRUWVLQWKHUHJLRQ,QWKHFDVHRI%UDD]LOWKHH[SRUWHG
HPLVVLRQVDUHEDODQFHGE\DKLJKDDPRXQWRIHPLVVLRQVHPEHGGHGLQLPSRUWV%UD]LODOVR OHDGVWKHUHJLRQ
LQ H[SRUW HPLVVLRQV LQWHQVLW\ HP
PLVVLRQV UHODWLYH WR WKH YDOXH RI H[SRUWV ,Q WHUPV RI
R QHW HPLVVLRQV
LQWHQVLW\WKHUHJLRQLVDVOLJKWQHWWLPSRUWHURI*+*HPLVVLRQVZLWKVLJQLILFDQWKHWHURJHHQHLW\DFURVVWKH
VXEUHJLRQV)LJXUH%
),*85(
(0,66,2162)*5(
((1+286(*$6(6(0%2',(',175$'('352'8&7
76
$ *UHHKKRXVHJDVHPLV
VVLRQV
LQH[SRUWV
% 1HWLQWHQVLW\RIHPLVV
VLRQV
LQWUDGH
SHUFHQWDJHRIJOREDOHPLVVLRQVLLQH[SRUWV
H[SRUWDQGLPSRUWHPLVVLRQVSHUYDOXH
HRIWUDGHIORZD
8QLWHG6WDWHV
DQG&DQDGD
5HVWRIWKH
:RUOG
&HQ
QWUDO
$PH
HULFD
&DULEEHDQ
0H[LFR
/$&
(8
%UD]LO
2WKHUV
$VLD3DFLILF
6RXUFH(&/$&EDVHGRQ:RUOG5HVRXUUFHV,QVWLWXWH&OLPDWH$QDO\VLV,QGLFDWRUV7RRO&$,7Y
D
.LORWRQVRI&2HPLVVLRQVLQH[SRUWVS
SHUPLOOLRQRI86LQH[SRUWVDQGNLORWRQVRI&2HPLVVLRQVLQLP
PSRUWVSHUPLOOLRQRI
86LQLPSRUWV
7KH RYHUDOO HPLVVLRQV DQGG HPLVVLRQ LQWHQVLW\ RI /DWLQ $PHULFDQ DQG &DULEEHHDQ FRXQWULHV LV
SULPDULO\DUHIOHFWLRQRIWKHUHJLRQQ¶VH[SRUWDQGLPSRUWVSHFLDOL]DWLRQ7KHUHJLRQKDVVHHHQDUHVXUJHQFH
RI SULPDU\ SURGXFWV LQ LWV H[SRRUW EDVNHW GXH LQ JUHDW SDUW WR WKH JURZWK RI JORE
EDO GHPDQG IRU
FRPPRGLWLHVDQGWKHHQVXLQJULVHLLQSULFHV)LJXUH
([SRUWUHODWHGHPLVVLRQVDUHXVHGWRSURYLLGHDFRPSDULVRQRIHPLVVLRQVLQSURGXFWLRQDVRSSRVHGWRDFRQVXPSWLRQ
QEDVHGSHUVSHFWLYH
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVX
XHVDQGLPSOLFDWLRQV«
),*85(
/$7,1$0(5,&$$
$1'7+(&$5,%%($1727$/(;32576$&&25',1*
*
727(&12/2*,&$/,17(16,7<
3ULPDU\3URGXFWV
V
1DWXUDO5HVRXUFHVEDVHG0DQXIDFWXUH
HV
/RZ7HFKQRORJ\ 0DQXIDFWXUHV
0HGLXP7HFKQRORJ\0DQXIDFWXUHV
+LJK7HFKQRORJ\ 0DQXIDFWXUHV
6RXUFH(&/$&E
EDVHGRQ81&2075$'(GDWD
,Q DGGLWLRQ WKH H[SRUW EDVNNHW RI WKH FRXQWULHV LQ /DWLQ $PHULFD DQG WKH &DULEE
EHDQ LQFOXGHV DQ
LPSRUWDQWVKDUHRI³(QYLURQPHQWDDOO\'LUW\,QGXVWULHV´(',ZKLFKDUHODUJHO\PDQXIDDFWXUHVEDVHGRQ
QDWXUDOUHVRXUFHVDQGSULPDU\SURRGXFWV(',VDUHGHILQHGDVWKRVHZLWKWKHKLJKHVWOHY
YHOVRISROOXWLRQ
DEDWHPHQW DQG FRQWURO H[SHQGLWXUUHV RI WKH HQWLUH UHJLRQ¶V H[SRUWV LQ ZHUH RI WKHVH ³GLUW\´
SURGXFWV )LJXUH $ ZLWK D ODUUJH YDULDWLRQ DFURVV FRXQWULHV 7KLV VKDUH LV DOVR JURZLQJ RYHU WLPH
6LQFH (',V FRUUHODWH FORVHO\ ZLLWK SULPDU\ SURGXFWV DQG QDWXUDO UHVRXUFHEDVHG PDQXIDFWXUHV
P
WKH
UHVXUJHQFHRISULPDU\SURGXFWVVKKRZQDERYHDOVRPHDQVWKDWWKHUHJLRQLVH[SRUWLQJPRUUHSURGXFWVIURP
(',V)LJXUH%VKRZVWKHDQQXXDOH[SRUWVRI(',VDVDVKDUHRIWRWDOH[SRUWVLQVHOHFWHGUHJLRQV7KH
GDWD VKRZV WKDW VLQFH WKH UHJLRQ¶V H[SRUW VKDUH RI (',V KDV EHHQ LQFUHDVLQJ LQ OLQH ZLWK WKH
ZRUOG DQG FORVHO\ UHODWHG WR WKH SULFH HIIHFW WKDW DOOVR H[SODLQV WKH
H[SHULHQFH RI WKH UHVW RI WKH Z
³UHSULPDUL]DWLRQ´VKRZQDERYH
(QYLURQPHQWDOO\ 'LUW\ ,QGXVWULHV (', ZHUH FKRVHQ EDVHG RQ SROOXWLRQ DEDWHPHQW DQG FRQWURO H[SHQGLWXUHV LQ WKH 8QLWHG 6WDWHV
QGXVWULHV WKDW LQFXUUHG
XVLQJ GDWD 7KH\ LQFOXGH LQGXVWULHV DW WKH WKUHHGLJLW OHYHO RI WKH 6,7& $OVR LQFOXGHG DUH WKRVH LQ
SROOXWLRQ DEDWHPHQWDQGFRQWURO H[SHQGGLWXUHV RI SHUFHQW RU PRUH RI WKHYDOXH RI WRWDO VDOHV 0XULOOR SS /RZ DQG
<HDWV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVX
XHVDQGLPSOLFDWLRQV«
),*85(
(;325762)(19
9,5210(17$///<6(16,7,9(352'8&76
3HUFHQWDJHRIHDFKUHJLRQ¶VWRWDOH[SRUWV
$ /DWLQ$PHULFDDQGWKH&D
DULEEHDQ
3DUDJXD\
*X\DQD
3DQDPD
+RQGXUDV
1LFDUDJXD
&RVWD5LFD
8UXJXD\
%ROLYLD3O6WRI
%ROLYLD3OXU6WDWHRI
(FXDGRU
0H[LFR
'RPLQLFDQ5HSXEOLF
*XDWHPDOD
6W9LQFHQW«
6DLQW9LQFHQWWKH*UHQDGLQHV
$UJHQWLQD
%DUEDGRV
&RORPELD
(O6DOYDGRU
:RUOG
/$&
%UD]LO
3HUX
-DPDLFD
7ULQLGDGDQG7REDJR
9HQH]XHOD%RO5HS«
%DKDPDV
&KLOH
% :RUOGDQGVHOHFWHGUHJ
JLRQV
ϯϬ
Ϯϱ
ϮϬ
ϭϱ
ϭϬ
:RUOG
(XURSHDQ8QLRQ
/$&
8QLWHG6WDWHV
8
$VLD3DFLILF
$
6RXUFH(&/$&EDVHGRQ8QLWHG1DWLRQ
QV&2075$'(GDWDEDVHRQOLQH
)LJXUH%DOVRVKRZVWKDWWKKHUHJLRQ¶VUHOLDQFHRQH[SRUWVRI(',VKDVFRQYHUJHGZ
ZLWKWKDWRIRWKHU
UHJLRQVLQWKHZRUOG$WLWVKLJKHVWOHYHOQHDUO\RI/$&¶VH[SRUWVZHUHRI³GLUW\´SUR
RGXFWVFRPSDUHG
/DWLQ$PHULFDDQGWKH&DULEEHDQ¶VH[SRUWVKDUHRI(',VZDVORZHUWKDQ
WRDZRUOGWRWDORI,Q/
WKHZRUOGDVDZKROHDQGKDVVLQFFHUHPDLQHGDWOHYHOVVLPLODUWRWKHZRUOGWRWDO7KHGLIIIHUHQFHVEHWZHHQ
WKHUHJLRQVVWXGLHGKDVGHFUHDVHGVLJQLILFDQWO\LQWKHODVW\HDUVIURPDQDYHUDJHRIS
SHUFHQWDJHSRLQWV
V
LQWKHVWRSHUFHQWDJHSRLQWVLQWKHVDQGOHVVWKDQSHUFHQWDJHSRLQWVLQWKH
*LYHQWKHGLIIHUHQFHVLQWKHHHQYLURQPHQWDOLPSDFWRIVHOHFWHGSURGXFWVDQGLQGXVWWULHVWKHUHH[LVWV
WKHRSSRUWXQLW\IRUFKDQJHVLQH[SSRUWSDWWHUQVWRKDYHDQHIIHFWRQJOREDO*+*HPLVVLRQ
QV,QDGGLWLRQWR
WKHREYLRXVQHHGWRGLVFRXUDJHWUDDGHRISROOXWLQJJRRGVJUHDWHUWUDGHRIJRRGVDQGVHUUYLFHVWKDWDUHLQ
WKHPVHOYHV PRUH FOLPDWH IULHQGO\\ RU WKDW DUH XVHG LQ WKH SURGXFWLRQ RI FOLPDWH IULHQG
GO\ SURGXFWV FDQ
KHOSDFFHOHUDWHWKHDGRSWLRQRIJUUHHQHUWHFKQRORJLHVDQGSURFHVVHVDURXQGWKHZRUOG7
7KLVZRXOGVHUYH
WR SURPRWH OHVV KDUPIXO WUDGH E\\ UHGXFLQJ WKH UHODWLYH FRVWV RI PRUH JUHHQ WHFKQRORJ
JLHV )LQGLQJ WKH
SURSHUZD\WRDFFRPSOLVKEURDGWUUDGHOLEHUDOL]DWLRQDQGDQDSSURSULDWHPL[RILQFHQWLYHVVWRSURPRWHOHVV
KDUPIXO WUDGH²DOOWKHZKLOHVDWLLVI\LQJWKHSULRULWLHVRILQGLYLGXDOQDWLRQV²KDVEHHQ
QDWWKHFHQWUHRI
UHFHQWGLVFXVVLRQVLQWKH:72
$FFRUGLQJ WR WKH :72¶V 'LUHFWRU *HQHUDO 3DVFDO /DP\ OLEHUDOL]LQJ WUDGH LQ
Q (QYLURQPHQWDO
*RRGVDQG6HUYLFHV(*6LQWKH FRQWH[WRIWKHRQJRLQJ'RKD5RXQGLVDQLPPHGLDWHFFRQWULEXWLRQWKDW
WKH :72 FDQ PDNH WR PLWLJDWH FFOLPDWH FKDQJH /DP\ 0RUHRYHU OLEHUDOL]LQJ (*6 FRXOG JLYH
VRPHFRXQWULHVLQ/DWLQ$PHULFDDDQGWKH&DULEEHDQWKHRSSRUWXQLW\WRFDSLWDOL]HRQH[LVVWLQJFRPSHWLWLYH
DGYDQWDJHVE\RSHQLQJQHZPDUNHHWV5HGXFLQJWDULIIVIRUWKHVHSURGXFWVZRXOGDOVRUHVX
XOWLQORZHULQSXW
FRVWVIRUFOLPDWHIULHQGO\WHFKQRORRJLHVDQGLPSURYHWKHDELOLW\RIWKHUHJLRQWRXVHWKHVHHWHFKQRORJLHVLQ
LWVSURGXFWLRQSURFHVV
1HJRWLDWLRQVRQKRZWREHVWWDFKLHYHWKHVHJRDOVKDYHFRDOHVFHGDURXQGWZRPDLQ LVVXHVVKRXOG
WDULIIVEHUHGXFHGEDVHGRQDSRVLWLYYHOLVWRIHQYLURQPHQWDOJRRGVWKDWKDYHFHUWDLQFKDUDFWHHULVWLFVEDVHGRQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
HQYLURQPHQWDOSURMHFWVLGHQWLILHGE\HDFKFRXQWU\VXFKDVWKHEXLOGLQJRIVRODUHQHUJ\IDUPVRUEDVHGRQ
D UHTXHVWRIIHU ELODWHUDO QHJRWLDWLRQ WKDW LV H[WHQGHG RQ D 0)1 EDVLV KRZ WR GHILQH WKH SURGXFWV RU
SURMHFWVWKDWZRXOGEHHOLJLEOHLQVXFKDZD\DVWRPDNHWKHSURFHVVHIIHFWLYHDQGHIILFLHQW
8QWLOQHJRWLDWLRQVUHDFKDFRQVHQVXVRQWKHGHILQLWLRQRI³JUHHQ´JRRGVDQGVHUYLFHVDQDQDO\VLV
RIWUDGHSDWWHUQVPXVWLQFOXGHWKHFDYHDWWKDWLWLVEDVHGRQDVHWRISURGXFWVWKDWDUHOLNHO\WREHFKDQJHG
:LWK WKLV LQ PLQG WKHUH LV VRPH YDOXH LQ DQDO\]LQJ OHYHOV DQG WUHQGV RI HQYLURQPHQWDO SURGXFWV
DFFRUGLQJWRDSDUWLFXODUGHILQLWLRQHVSHFLDOO\VLQFHPDQ\RIWKHH[LVWLQJSURSRVDOVKDYHODUJHRYHUODSV
,QWRWDO(QYLURQPHQWDO*RRGV(*H[SRUWVIRUWKHSURGXFWVLQWKH:72¶V³)ULHQGVRI
(QYLURQPHQWDO *RRGV´ OLVW DPRXQWHG WR 86 ELOOLRQ RU RI WKH ZRUOG¶V WRWDO WUDGH LQ WKDW
VDPH \HDU(*H[SRUWVUHSUHVHQWHGRIWKH86WULOOLRQPDQXIDFWXUHGSURGXFWVWUDGHGLQ
7DEOH 7KH UHIHUHQFH XQLYHUVH RI HQYLURQPHQWDO JRRGV RI LQWHUHVW DFURVV DOO SURSRVDOV DQG
VXEPLVVLRQV ³:72DOO´ LQ 7DEOH EHORZ UHSUHVHQWV RI ZRUOG WUDGH LQ PDQXIDFWXUHV LQ :72 /DWLQ $PHULFD DQG WKH &DULEEHDQ¶V H[SRUWV RI WKHVH SURGXFWV DPRXQWHG WR 86 ELOOLRQRIWKHUHJLRQ¶VWRWDOH[SRUWVDQGQHDUO\KDOIRILWVWRWDOH[SRUWVRIPDQXIDFWXUHV
7$%/(
(;325762)(19,5210(17$/*22'6&203$5,6212)6(/(&7('352326$/6
86ELOOLRQVDQGSHUFHQWDJHV
7UDGHYDOXH
86ELOOLRQV
5HJLRQDQGOLVW
:25/'H[SRUWV
6KDUHRIWRWDOWUDGH
6KDUHRIPDQXIDFWXUHG
SURGXFWV
WUDGHD
)ULHQGV
$3(&
2(&'
:%
:72$OOE
/$&H[SRUWV
)ULHQGV
$3(&
2(&'
:%
:72$OOE
6RXUFH(&/$&EDVHGRQ8QLWHG1DWLRQV&2075$'(GDWDEDVHRQOLQH
D
6,7&UHYLVLRQFRGHV
E
³:72$OO´UHIHUVWRWKHVXPRIDOOWKHSURSRVDOVFXUUHQWO\EHLQJGLVFXVVHGLQWKH:72/LVWDYDLODEOHLQ:72
2YHU WLPH WRWDO ZRUOG WUDGH LQ HQYLURQPHQWDO JRRGV (*V ²GHILQHG DV WKRVH LQ WKH ³)ULHQGV
´OLVW²KDVLQFUHDVHGVLJQLILFDQWO\IURPRIWRWDOH[SRUWVLQWRRYHULQ5HODWLYH
WRPDQXIDFWXUHGWUDGH(*VKDYHDOVRJDLQHGVLJQLILFDQWJURXQGIURPMXVWLQWRQHDUO\LQ
)LJXUH(*H[SRUWVGHFOLQHGLQGXHWRWKHZLGHVSUHDGHFRQRPLFFULVLVIDOOLQJWR86
ELOOLRQDIWHUDQDOOWLPHKLJKRI86ELOOLRQLQWKHSUHYLRXV\HDU
7KLV OLVW ZDV ILUVW VSHFLILHG LQ D :72 QRQSDSHU :72 E\ D JURXS RI FRXQWULHV UHIHUUHG WR DV ³)ULHQGV RI (QYLURQPHQWDO
*RRGV´ DV SDUW RI WKH RQJRLQJ QHJRWLDWLRQV XQGHU SDUDJUDSK ,,, RI WKH 'RKD 0LQLVWHULDO 'HFODUDWLRQ ZKLFK FDOOV IRU ³WKH
UHGXFWLRQRUDVDSSURSULDWHHOLPLQDWLRQRIWDULIIDQGQRQWDULIIEDUULHUVWRHQYLURQPHQWDOJRRGVDQGVHUYLFHV´7KHFRXQWULHVDUH
&DQDGD -DSDQ .RUHD 1HZ =HDODQG 1RUZD\ 6ZLW]HUODQG &KLQHVH 7DLSHL 7DLZDQ WKH 8QLWHG 6WDWHV DQG WKH PHPEHUV RI WKH
(XURSHDQ8QLRQ
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVX
XHVDQGLPSOLFDWLRQV«
),*85(
:25/'(;325762)
)(19,5210(17$/*22'6³)5,(1'6´/,67
86ELOOLRQVDQGSHUFHQWDJHV
VKDUHRIPDQXIIDFWXUHV
ULJKWVFDOOH
VKDUHRIWRWDO
FDOH
ULJKWVF
(*WUDGHYDOXH86ELOOLRQV
6RXUFH(&/$&EDVHGRQ8QLWHG1
1DWLRQV&2075$'(GDWDEDVHRQOLQH
1RWH7KHWRWDOYDOXHRIWKH³)ULHQGV´OLVWIRUHDFK\HDULVWKHVXPRIWKHYDOXHVUHSRUWHGE\HDF
FKFRXQWU\LQDQ\RI
WKUHHYHUVLRQVRIWKH+DUPRQL]HG6\VWHP+6DQGRSWLQJWRWKHODWHVWYHUVLRQZK
KHUHSRVVLEOH
/DWLQ$PHULFDDQGWKH&DULEEEHDQH[SRUWVRI(*VKDYHIROORZHGWKHVDPHSDWWHUQ JURZLQJVWHDGLO\
LQYDOXHVLQFHEHIRUHVXIIHULQJJIURPWKHJOREDOFULVLVLQ$VDVKDUHRIWRWDOH[SR
RUWVKRZHYHUWKH
UHVXUJHQFHRISULPDU\SURGXFWV¶H[[SRUWVVKRZQDERYHKDVUHVXOWHGLQDGHFUHDVHLQWKHVKDDUHRI(*VLQWKH
H[SRUWEDVNHWIURPDKLJKRI
LQWRLQ+RZHYHUDVVKDUHRIPDQX
XIDFWXUHGH[SRUWV
HQYLURQPHQWDOJRRGVFRQWLQXHWRH[[SDQGIURPLQWRLQ)LJXUH
),*85(
/$7,1$0(5,&$$1'7
7+(&$5,%%($1(;325762)(19,5210(17$/*2
22'6
³)5,(1'6´/,67
86ELOOLRQVDQGSHUFHQWDJHV
VKDUHRIPDQXIDFWWXUHV
ULJKWVFDOH
VKDUHRIWRWDO
ULJKWVFDOH
(*WUDGHYDOXH86ELOOLRQV
6RXUFH(&/$&EDVHGRQ8QLWHG1
1DWLRQV&2075$'(GDWDEDVHRQOLQH
1RWH7KHWRWDOYDOXHRIWKH³)ULHQGV´OLVWIRUHDFK\HDULVWKHVXPRIWKHYDOXHVUHSRUWHGE\HDF
FKFRXQWU\LQDQ\RI
WKUHHYHUVLRQVRIWKH+DUPRQL]HG6\VWHP+6DQGRSWLQJWRWKHODWHVWYHUVLRQZK
KHUHSRVVLEOH
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
7UDGH LQ (QYLURQPHQWDO *RRGV LV KLJKO\ FRQFHQWUDWHG ZLWK WKH ODUJHVW H[SRUWHUV DFFRXQWLQJ
IRU RI WKH WRWDO *LYHQ WKH KLJK WHFKQRORJLFDO FRQWHQW RI WKH SURGXFWV LQ WKH (* OLVWV LW LV QRW
VXUSULVLQJWKDWWKHWRSH[SRUWHUVDUHWKHZRUOG¶VODUJHVWLQGXVWULDOL]HGHFRQRPLHV/DWLQ$PHULFDDQGWKH
&DULEEHDQ ODJV EHKLQG RWKHU UHJLRQV LQ WKH ZRUOG SDUWO\ DV D UHVXOW RI LWV FRPSDUDWLYH DGYDQWDJHV RQ
QDWXUDO UHVRXUFH H[SRUWV ,Q WKH UHJLRQ RQO\ 0H[LFR LV D VLJQLILFDQW H[SRUWHU RI (* 7DEOH 7KH
FRXQWU\ LV WKH WK ODUJHVW H[SRUWHU RI (* LQ WKH ZRUOG 7KH 86 LV WKH VLQJOH ODUJHVW EX\HU RI
HQYLURQPHQWDO JRRGV DEVRUELQJ RI WKH ZRUOG¶V WRWDO (* WUDGH DQG RYHU RI 0H[LFR¶V WRWDO
H[SRUWVRI(*SURGXFWV
7$%/(
(;325762)(19,5210(17$/*22'6723(;3257(56$1',03257(56
³)ULHQG¶V´OLVW86ELOOLRQVDQGSHUFHQWDJHV
5HJLRQ&RXQWU\
([SRUWV
6KDUHRI7RWDO
86'ELOOLRQV
3HUFHQW
5HJLRQ&RXQWU\
8QLWHG6WDWHV
&DQDGD
(8
(8
*HUPDQ\
,WDO\
)UDQFH
8QLWHG.LQJGRP
1HWKHUODQGV
$VLD3DFLILF
,PSRUWV
6KDUHRI7RWDO
86'ELOOLRQV
3HUFHQW
8QLWHG6WDWHV
&DQDGD
*HUPDQ\
)UDQFH
8QLWHG.LQJGRP
,WDO\
6SDLQ
$VLD3DFLILF
&KLQD
&KLQD
-DSDQ
5HSRI.RUHD
5HSRI.RUHD
-DSDQ
6LQJDSRUH
6LQJDSRUH
+RQJ.RQJ
7DLZDQ
/$&
/$&
0H[LFR
0H[LFR
%UD]LO
%UD]LO
$UJHQWLQD
9HQH]XHOD
&RORPELD
$UJHQWLQD
&KLOH
&KLOH
5HVWRIWKH:RUOG
*UDQG7RWDO
5HVWRIWKH:RUOG
*UDQG7RWDO
6RXUFH(&/$&EDVHGRQ8QLWHG1DWLRQV&2075$'(GDWDEDVHRQOLQH
%
2SSRUWXQLWLHVLQDQHZHUDRIFDUERQDFFRXQWLQJ
'HYHORSLQJFRXQWULHVDUHZHOOSRVLWLRQHGWRJDLQIURPOLEHUDOL]DWLRQRI(*V³/LEHUDOLVDWLRQFRXOGDOORZ
VRPH GHYHORSLQJ FRXQWULHV WR VLJQLILFDQWO\ H[SDQG WKHLU SURGXFWLRQ DQG H[SRUW RI VXFK G\QDPLF
HQYLURQPHQWDOJRRGVDQGWKXVSURPRWHLQFUHDVHGLQGXVWULDOGLYHUVLILFDWLRQRIWKHLUHFRQRPLHV)RUPDQ\
RWKHUV WUDGH OLEHUDOLVDWLRQ RI HQYLURQPHQWDOO\ SUHIHUDEOH LQGXVWULDO DQG FRQVXPHU JRRGV PD\ SURYLGH
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
LPPHGLDWH JDLQV QHHGHG WR VXSSRUW UXUDO HFRQRPLHV DQG IDFLOLWDWH WKH LQWHJUDWLRQ RI WKHLU VPDOO DQG
PHGLXPVL]HGHQWHUSULVHV LQWRJOREDOVXSSO\FKDLQV´+DPZH\,QIDFWDUHFHQWDQDO\VLVRI WKH
³)ULHQGV´OLVWSRLQWVWRWKHUHODWLYHLPSRUWDQFHRIVRPHGHYHORSLQJFRXQWULHVLQWKHJOREDOWUDGHRI
PDQ\(*FDWHJRULHV-KD81&7$'S
*LYHQWKHH[SRUWVWUXFWXUHLQWKHUHJLRQLWLVFOHDUWKDWWKHDJULFXOWXUDOVHFWRUPXVWOHDGWKHHIIRUWWR
DGDSW WR QHZ UXOHV DQG UHTXLUHPHQWV LQ H[SRUW PDUNHWV $ IHZ FRXQWULHV LQ /DWLQ $PHULFD DQG WKH
&DULEEHDQDUHZRUNLQJWRFDOFXODWHWKHFDUERQIRRWSULQWRIVHOHFWHGLQGXVWULHVDQGDUHXVLQJWKLVSURFHVVWR
GHYHORS PHWKRGV DQG WKH WHFKQLFDO FDSDFLW\ WR H[SDQG WR RWKHU VHJPHQWV RI WKHLU HFRQRPLHV $ SULPH
H[DPSOH LV &KLOH¶V DJULFXOWXUDO VHFWRU ZKHUH WKH JRYHUQPHQW DQG LQGXVWU\ OHDGHUV KDYH FDOFXODWHG WKH
FDUERQIRRWSULQWRIWKHFRXQWU\¶VZLQHLQGXVWU\XVLQJWKH%ULWLVK3$6PHWKRGRORJ\7KHLQGXVWU\LV
XVLQJ WKLV LQIRUPDWLRQ WR LGHQWLI\ DQG UHPHG\ LQHIILFLHQFLHV LQ WKH SURGXFWLRQ FKDLQ 6RPH ZLQH PDNHUV
KDYHDGRSWHG PHDVXUHVWKDW KDYHUHVXOWHG LQDUHGXFWLRQLQ WKHFDUERQIRRWSULQW RIWKHLURSHUDWLRQV
7KHDXWKRULWLHVFODLPWKDWWKHLUJRDOLVWRFDOFXODWHWKHHPLVVLRQVRIWKHHQWLUHDJULFXOWXUDOVHFWRUDQGZRUN
WRZDUG PDNLQJ DOO DJULFXOWXUDO SURGXFWLRQ FDUERQ QHXWUDO 'RQRVR 7R VXSSRUW WKLV JRDO WKH
$JULFXOWXUDO 5HVHDUFK ,QVWLWXWH FRPPLVVLRQHG DQG FRPSOHWHG LQ -DQXDU\ D VWXG\ RI WKH FDUERQ
IRRWSULQW RI WKH FRXQWU\¶V DJULFXOWXUDO H[SRUWV ,1,$ DQG '(80$1 $V D UHVXOW WKH 0LQLVWU\ RI
$JULFXOWXUHQRZKDVDQXPEHURIFDUERQIRRWSULQWFDOFXODWRUVDYDLODEOHWRWKHDJULFXOWXUDOVHFWRULQFOXGLQJ
YHJHWDEOHSURGXFWVZLWKDQGZLWKRXWODQGXVHFKDQJHIDFWRUVDQLPDOSURGXFWVDQGERWWOHGZLQH
$WWKHVDPHWLPHDQGZLWKFRRSHUDWLRQIURPLWV&KLOHDQFRXQWHUSDUWVDVZHOODVH[SHUWVLQ1HZ
=HDODQGDFDGHPLFVDQGRWKHUWHFKQLFDOSDUWQHUV8UXJXD\LVGHYHORSLQJLWVRZQWHFKQLFDOFDSDFLW\DWWKH
LQVWLWXWLRQDOOHYHO7KHFRXQWU\LVZHOODZDUHRIWKHSRWHQWLDOIRUQHZUHTXLUHPHQWVWRLPSDFWWKHH[SRUW
VHFWRU¶V FRPSHWLWLYHQHVV 7KH DJULFXOWXUDO DQG OLYHVWRFN LQGXVWU\ LV HVSHFLDOO\ LQWHUHVWHG LQ GHYHORSLQJ
WKHFDSDFLW\WRPHDVXUHDQGUHDFWWRQHZFDUERQDFFRXQWLQJUHTXLUHPHQWVLQOLJKWRIWKHRQJRLQJHIIRUWV
DURXQGWKHZRUOGWRPHDVXUHDQGPLWLJDWHHPLVVLRQVRIWKHVHSURGXFWV2\KDQWFDEDO8UXJXD\LV
DFWLYHO\ ORRNLQJ WR GHVLJQ FRPPHUFLDO PDUNHWLQJ DQG GLSORPDWLF VWUDWHJLHV WR LPSURYH WKH LPDJH DQG
DFFHSWDELOLW\ RI LWV SURGXFWV LQ OLJKW RI WKHVH WUHQGV $XWKRULWLHV KDYH RUJDQL]HG ZRUNLQJ JURXSV DW WKH
LQVWLWXWLRQDODQGWHFKQLFDOOHYHOV&RPSDQLHVDUHEURXJKWWRJHWKHUGHSHQGLQJRQWKHLUSODFHLQWKHYDOXH
FKDLQ RI DIIHFWHG SURGXFWV ZKLOH WHFKQLFDO H[SHUWV DUH WDSSHG IURP DFDGHPLF LQVWLWXWLRQDO DQG
JRYHUQPHQWDO ERGLHV 8UXJXD\ KRSHV WR FRQFOXGH VWXGLHV DQG IRUPXODWH VWUDWHJLHV IRU PHDW SURGXFWV
FDWWOHDQGVKHHSGDLU\ULFHJUDLQVIRUHVWU\DQGIUXLWSURGXFWV
*HQHUDOO\ FKDQJHV LQ WKH FRPSHWLWLYHQHVV RI SURGXFWV DQG VHUYLFHV ZLOO UHVXOW LQ FKDQJHV LQ
FRPSDUDWLYHDGYDQWDJHSURILOHVIDYRULQJQRQWUDGLWLRQDOH[SRUWVHFWRUVWKDWKDYHORZHUUHODWLYHFDUERQ
IRRWSULQWV7KHFDUERQIRRWSULQWDOVRDOORZVIRUH[SRUWHUVWRGLIIHUHQWLDWHWKHLUSURGXFWVEDVHGRQRULJLQ
7KLVLVDQHZRSSRUWXQLW\WRDWWUDFWLQYHVWPHQWLQFOXGLQJ)',LQVHUYLFHDQGKLJKWHFKQRORJ\VHFWRUV
(QJLQHHULQJDQGFRQVXOWLQJVHUYLFHVWKDWFXUUHQWO\H[LVWFRXOGEHOHYHUDJHGLQQHZVHFWRUVKHOSLQJVRPH
HFRQRPLHVPLJUDWHWRDPRUHVHUYLFHRULHQWHGSURILOH7KHUHJLRQFRXOGDOVREHQHILWIURPLWVUHODWLYHO\
IDYRUDEOHFOLPDWHDQGLQVRPHFDVHVEHWWHUHQHUJ\PDWUL[
&OLPDWHDLGIRUHPHUJLQJHFRQRPLHV
$ QXPEHU RI PXOWLODWHUDO DQG ELODWHUDO FOLPDWH FKDQJH ILQDQFLQJ PHFKDQLVPV KDYH EHHQ HVWDEOLVKHG LQ
UHFHQW \HDUVWRDVVLVWGHYHORSLQJFRXQWULHVLQWKHLUPLWLJDWLRQDQGDGDSWDWLRQHIIRUWVWRDGMXVWWRDQHZ
ORZFDUERQ GHYHORSPHQW SDWK 7KH REMHFWLYHV RI WKHVH IXQGV RYHUODS ZLWK VRPH RI WKH DFWLYLWLHV RI
2IILFLDO 'HYHORSPHQW $VVLVWDQFH 2'$ ZKLFK DLPV WR KHOS FRXQWULHV JURZ DQG GHYHORS LPSO\LQJ D
QHHGIRUFRRUGLQDWLRQRIERWKGRQRUVDQGUHFLSLHQWV¶VWUDWHJLHVDQGDJHQGDV
2ISDUWLFXODUFRQFHUQLVKRZQHZFRPPLWPHQWVIRUFOLPDWHDGDSWDWLRQDQGPLWLJDWLRQILQDQFHZLOO
FRPSOHPHQW RU GLVUXSW H[LVWLQJ 2'$ ILQDQFLQJ$ UHFHQW DQDO\VLV RI KRZ 2'$DQG FOLPDWH ILQDQFLQJ
PHFKDQLVPV LQWHUDFW DQG RYHUODS VKRZV D ULVN WKDW GLYHUWLQJ 2'$ IXQGV WRZDUGV DGDSWDWLRQ DQG
7KH*OREDO(QYLURQPHQW)DFLOLW\DQG:RUOG%DQN&OLPDWH)XQGVDUHWKHPDLQPXOWLODWHUDOIXQGVFXUUHQWO\LQH[LVWHQFHWKRXJKQHZ
ELODWHUDO PHFKDQLVPV FRXOG KDYH D IXQGDPHQWDO LPSDFW RQ WKH SUHVHQW DUFKLWHFWXUH IRU JOREDO HQYLURQPHQW ILQDQFH $QFKDUD] DQG
6XOWDQ)RUDFRPSOHWHOLVWDQGDQDQDO\VLVRIWKHH[LVWLQJPXOWLODWHUDODQGELODWHUDOIXQGVVHH3RUWHUHWDO
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
PLWLJDWLRQSURMHFWVZRXOGGHFUHDVHWKHDPRXQWRIDLGDYDLODEOHIRUVRPHUHJLRQVDQGIRUVRPHVHFWRUV,Q
SDUWLFXODUWKHVWXG\IRXQGWKDWZKLOH/$&ZRXOGUHFHLYHPRUHIXQGVDWWKHH[SHQVHRIRWKHUUHJLRQV
JOREDO$LGIRU7UDGHIORZVZRXOGGHFUHDVH%URZQ&DQWRUHDQGWH9HOGH
,QGLYLGXDOO\ WKH UHGXFWLRQ LQ $LG IRU 7UDGH ILQDQFLQJ ZRXOG KDYH D VLJQLILFDQW LPSDFW RQ
YXOQHUDEOHRSHQHFRQRPLHVLQWKHUHJLRQ/$&LVDOUHDG\DSURSRUWLRQDOO\VPDOOUHFLSLHQWRIJOREDO$LG
IRU7UDGHILQDQFLQJDFFRXQWLQJIRURQO\RIWRWDOIXQGVLQ$IXUWKHUUHGXFWLRQRIIXQGVZRXOG
DIIHFWLQYHVWPHQWLQHFRQRPLFLQIUDVWUXFWXUHDQGSURGXFWLRQFDSDFLW\EXLOGLQJWKHWZRPDLQDUHDVRI$LG
IRU7UDGHSURMHFWVLQWKHUHJLRQ
7RRIIVHWWKLVJUHDWHUFRRUGLQDWLRQEHWZHHQFOLPDWHDGDSWDWLRQDQGPLWLJDWLRQSURMHFWVDQG$LGIRU
7UDGHSULRULWLHVLVQHHGHG,QWKHVDPHZD\WKDWFOLPDWHFKDQJHHIIRUWVPXVWLQFRUSRUDWHLQWHUQDWLRQDOWUDGH
LQ WKHLU DJHQGD $LG IRU 7UDGH DV D GHYHORSPHQW LQVWUXPHQW VKRXOG FRQVLGHU WKH LVVXH RI VXVWDLQDEOH
JURZWKDQGFOLPDWHFKDQJH7KHFKDOOHQJHOLHVLQDFKLHYLQJJUHDWHUV\QHUJ\EHWZHHQWKHVHWZRILQDQFLQJ
PHFKDQLVPV VR DV WR DFKLHYH WKH JRDOV RI HDFK WR KDUQHVV WUDGH DV DQ HQJLQH RI JURZWK IRU GHYHORSLQJ
FRXQWULHVLQOLQHZLWKWKHLUGHYHORSPHQWREMHFWLYHVDQGWRIDFLOLWDWHPRUHVXVWDLQDEOHHFRQRPLFDFWLYLW\
&OLPDWH FKDQJH ILQDQFLQJ PHFKDQLVPV GR QRW SURYLGH IRU WUDGH SURPRWLRQ ZKLFK LV ILQDQFHG
WKURXJK WKH $LG IRU 7UDGH LQLWLDWLYH 1RQHWKHOHVV FOLPDWH FKDQJH DIIHFWV DQG LV DIIHFWHG E\ WUDGH DQG
FOLPDWH FKDQJH DQG $LG IRU 7UDGH ILQDQFLQJ PHFKDQLVPV DUH WKXV FRPSOHPHQWDU\ 7R DFKLHYH WKLV
FRRUGLQDWLRQ DQG FRPSOHPHQWDULW\ LW LV LPSRUWDQW WR LGHQWLI\ FRPPRQ SULRULW\ DUHDV RI $LG IRU 7UDGH
DQGFOLPDWHFKDQJHILQDQFLQJPHFKDQLVPV$VXJJHVWHGPDSSLQJRIVXFKSULRULW\DUHDVFDQEHIRXQGLQ
$QFKDUD]DQG6XOWDQ$FFRUGLQJWRWKHPHWKRGRORJ\XVHGLQWKHVWXG\WKHUHDUHWZRVSHFLILF$LG
IRU 7UDGH FDWHJRULHV WKDW PRUH HDVLO\ PDS WR FOLPDWH FKDQJH SURMHFWV HFRQRPLF LQIUDVWUXFWXUH DQG
EXLOGLQJSURGXFWLYHFDSDFLW\
7$%/(
&2002135,25,7,(62)$,')2575$'($1'&/,0$7(&+$1*(),1$1&,1*0(&+$1,606
&OLPDWHFKDQJHUHODWHGSURMHFW
$LGIRU7UDGHVXEFDWHJRU\
$LGIRU7UDGHFDWHJRU\
0DUNHWDFFHVVIRUQHZSURGXFWV
7UDGH3ROLF\0XOWLODWHUDOWUDGH
QHJRWLDWLRQV
7UDGH3ROLF\DQG5HJXODWLRQDQG7UDGH
UHODWHG$GMXVWPHQW
,QYHVWPHQWVLQGDPVK\GUDXOLFV
PRGHUQZDWHUGLVWULEXWLRQV\VWHPV
5HKDELOLWDWLRQRIZHDWKHUEDWWHUHG
LQIUDVWUXFWXUH
7UDQVSRUWDQG6WRUDJH
(FRQRPLFLQIUDVWUXFWXUH
3URWHFWLRQRIFRDVWDO]RQHVIURPVHD
OHYHOULVH
(QHUJ\UHODWHGSURMHFWVK\GURSRZHU
UHQHZDEOHHQHUJLHV
(QHUJ\VXSSO\DQGJHQHUDWLRQ
6RLOUHKDELOLWDWLRQODQGWHUUDFLQJ
IHUWLOL]DWLRQ
'LYHUVLI\LQJLQWRFOLPDWHFKDQJH
UHVLVWDQWFURSV
$JULFXOWXUH
%XLOGLQJSURGXFWLYHFDSDFLW\
&KDQJHVLQFURSPL[FKDQJHVLQPL[
RIOLYHVWRFNEUHHGDQGILVKVSHFLHV
'LYHUVLI\LQJDZD\IURPVHFWRUV
YXOQHUDEOHWRFOLPDWHFKDQJH
DJULFXOWXUH
,QGXVWU\
6RXUFH$QFKDUD]9LQD\H'H\DQG5LDG$6XOWDQ³$LGIRU7UDGHDQG&OLPDWH&KDQJH)LQDQFLQJ0HFKDQLVPV%HVW
3UDFWLFHV DQG /HVVRQV /HDUQHG IRU /'&V DQG 69(V LQ $IULFD´ ,&76' 3URJUDPPH RQ &RPSHWLWLYHQHVV DQG 6XVWDLQDEOH
'HYHORSPHQW1ƒ*HQHYD6ZLW]HUODQG,QWHUQDWLR QDO&HQWUHIRU7UDGHDQG6XVWDLQDEOH'HYHORSPHQW-DQXDU\
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
$VSULYDWHDQGJRYHUQPHQWHQGRUVHGODEHOLQJVWDQGDUGVPXOWLSO\PDQ\/$&FRXQWULHVZLOOODFN
WKH LQVWLWXWLRQDO WHFKQLFDO DQG EXGJHWDU\ FDSDFLW\ WR PHHW WKH QHZ UHTXLUHPHQWV $W WKH &RSHQKDJHQ
VXPPLW LQ WKH 86 ELOOLRQ &RSHQKDJHQ*UHHQ&OLPDWH )XQG ZDV DQQRXQFHG WR IXQG FDSDFLW\
EXLOGLQJWHFKQRORJ\GHYHORSPHQWDQGWUDQVIHUDVZHOODVDGDSWDWLRQPHDVXUHV7KHIXQGLVH[SHFWHGWR
DVVLVWGHYHORSLQJFRXQWULHVLQFOLPDWHFKDQJHPLWLJDWLRQDQGDGDSWDWLRQEHWZHHQDQG,WLVQRW
FOHDUKRZHYHUKRZPXFKRIWKLVZLOOEHGLUHFWHGWR/$&,QRUGHUWRPD[LPL]HDFFHVVWRERWKFOLPDWH
FKDQJHDQG$LGIRU7UDGHILQDQFLQJLWLVLPSRUWDQWWKDWWKHUHJLRQ¶VJRYHUQPHQWVGHYHORSQDWLRQDOSODQV
DQGSURMHFWVWKDWDGGUHVVWKHLUSDUWLFXODUQHHGVDQGORQJWHUPREMHFWLYHV
,Q 'HFHPEHU WKH GHOHJDWHV RI WKH 8QLWHG 1DWLRQV &OLPDWH &KDQJH &RQIHUHQFH DJUHHG WR WKH ³&RSHQKDJHQ $FFRUG´ ZKLFK
LQFOXGHV 86 ELOOLRQ LQ QHZ DQG DGGLWLRQDO UHVRXUFHV WR EH VSHQW LQ DGDSWDWLRQ DQG PLWLJDWLRQ HIIRUWV EHWZHHQ DQG 81)&&&
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
9, &RQFOXVLRQVDQG
UHFRPPHQGDWLRQV
3ULYDWHVHFWRUUHTXLUHPHQWVWRDFFRXQWIRUWKHFDUERQIRRWSULQWRILQGLYLGXDO
SURGXFWVZLOOFRQWLQXHWRPXOWLSO\LQLQGXVWULDOL]HGFRXQWULHV$QXPEHURI
RIILFLDO LQVWLWXWLRQV DUH GHYHORSLQJ QHZ PHWKRGRORJLHV DQG SHUIHFWLQJ
H[LVWLQJPHWKRGRORJLHVWRPHDVXUHFDUERQHPLVVLRQVGXULQJWKHOLIHF\FOHRI
D SURGXFW DQG WKHUH DUH RQJRLQJ HIIRUWV WR KDUPRQL]H PDQ\ RI WKHVH 7KH
LPSRUWDQFHRI/$&LQYROYHPHQWLQWKHVWDQGDUGVFUHDWLRQSURFHVVFDQQRWEH
RYHUHPSKDVL]HG6KRXOGWKHUHJLRQ¶VLQGXVWULHVH[SRUWHUVDQGJRYHUQPHQWV
IDLO WR LQYROYH WKHPVHOYHV LQ WKH VWDQGDUGV FUHDWLRQ SURFHVV LPSRUWDQW
ERXQGDULHVZLWKLQ3&)PD\EHRYHUORRNHGOHDGLQJWRVWDQGDUGVWKDWGRQRW
UHIOHFWWKHWUXH3&)RIWKHUHJLRQ¶VH[SRUWV
/DWLQ $PHULFDQ DQG &DULEEHDQ SROLF\ PDNHUV DQG LQGXVWU\
UHSUHVHQWDWLYHV PXVW EH SUHSDUHG IRU WKLV LVVXH DV WKH LPSOLFDWLRQV IRU
H[SRUWV WHFKQLFDO FDSDFLW\ IRU PRQLWRULQJ YHULILFDWLRQ DQG
LPSOHPHQWDWLRQ PD\ EHFRPH LQVXUPRXQWDEOH 7KH UHJLRQ PXVW EH UHDG\
IRU FKDQJHV WKDW SHQDOL]H ³GLUW\´ SURGXFWV (IILFLHQW SURGXFHUV DQG
FRXQWULHV ZLWK HVWDEOLVKHG FRPSDUDWLYH DGYDQWDJHV LQ SURYLGLQJ PRUH
HQYLURQPHQWDOO\IULHQGO\SURGXFWVDQGVHUYLFHVZLOOEHQHILWIURPFOLPDWH
UHODWHGERUGHUPHDVXUHV$WWKHVDPHWLPHLQGXVWULHVWKDWDUHQRW³JUHHQ
FRPSHWLWLYH´ZLOOIDFHKLJKHUFRVWVDQGQHZFRPSHWLWLRQ
/$& PD\ EH IDFLQJ WKH UHDOLWLHV RI FDUERQ ODEHOLQJ VRRQHU WKDQ
H[SHFWHG ,I WKH UHJLRQ LV WR UHPDLQ FRPSHWLWLYH LQ WKH WUDGH RI FDUERQ
ODEHOHG JRRGV SROLF\ PDNHUV DQG SULYDWH DJHQWV PXVW ZRUN WRJHWKHU WR
HQVXUH WKDW WKH LQVWLWXWLRQDO FDSDFLW\ DQG DSSURSULDWH PHDVXUHPHQW
PHFKDQLVPV DUH LQ SODFH WR IDFLOLWDWH WKH 3&) SURFHVV DQG WR PHHW QHZ
UHTXLUHPHQWV LQ H[SRUW PDUNHWV 7KH\ PXVW DOVR HQFRXUDJH JUHDWHU
VFLHQWLILF GLDORJXH DQG NQRZOHGJH RI WKH VFLHQWLILF EDVH IRU FDUERQ
ODEHOLQJPHWKRGRORJLHVDQGSUDFWLFHV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
*RYHUQPHQWVRIWKHUHJLRQFDQWDNHDFWLRQWRHQVXUHWKDWWKHUHJLRQ¶VH[SRUWVUHPDLQFRPSHWLWLYH
DJJUHVVLYHO\LQYHVWLQJLQUHQHZDEOHHQHUJ\VRXUFHVHQFRXUDJLQJHQWHUSULVHVWKDWUHTXLUHOHVVHQHUJ\DQG
GHYHORSLQJ VXSSO\ FKDLQV WKDW PLQLPL]H WUDQVSRUW HPLVVLRQV 7KH UHJLRQ VKRXOG DOVR DSSO\ 3&)
PHWKRGRORJLHV WR VXSSO\ FKDLQV WR LGHQWLI\ ZD\V WR UHGXFH WKH FDUERQ IRRWSULQW RI ILQDO JRRGV DQG
H[SRUWV $QRWKHU FRQWULEXWLRQ WKDW JRYHUQPHQWV FDQ PDNH LV WR FUHDWH DQG PDLQWDLQ JRRG GDWD IURP
QDWLRQDO VRXUFHV WR LQIRUP WKH SULYDWH VHFWRU 7KLV ZRXOG KHOS SURGXFHUV FDOFXODWH HPLVVLRQV LQ WKHLU
SURGXFWVDQGLGHQWLI\LQHIILFLHQFLHVLQWKHLUSURGXFWLRQFKDLQV
:KHWKHU RU QRW WKH (XURSHDQ &RPPLVVLRQ WKH 8QLWHG 6WDWHV RU RWKHU FRXQWULHV SDVV OHJLVODWLRQ
LQFOXGLQJ FDUERQ ERUGHU PHDVXUHV DQG FDUERQ ODEHOLQJ VFKHPHV FRXQWULHV LQ /DWLQ $PHULFD DQG WKH
&DULEEHDQ PXVW EH SUHSDUHG DQG LQIRUPHG DV WR ZKDW WKHVH LPSOLFDWLRQV PD\ HQWDLO $OWKRXJK LW LV
XQOLNHO\WKDWERUGHUPHFKDQLVPVDQGODEHOLQJVFKHPHVZLOOEHLPSOHPHQWHGLQWKHQHDUWHUPLWLVLQWKH
UHJLRQ¶VEHVWLQWHUHVWWRPRYHIRUZDUGLQLPSOHPHQWLQJORZHPLVVLRQWHFKQRORJLHVDQGHQHUJ\HIILFLHQW
SURGXFWLRQV\VWHPV
(DUO\ DFWLRQ IRU EXLOGLQJ D ORZ FDUERQ HFRQRP\ FDQ UHVXOW LQ JDLQV LQ H[SRUW FRPSHWLWLYHQHVV
$OWKRXJK D JOREDO FOLPDWH FKDQJH DFWLRQ SODQ KDV QRW \HW EHHQ DJUHHG XSRQ WKH JURZLQJ VFDUFLW\ RI
IRVVLOIXHOVDQGQRQUHQHZDEOHUHVRXUFHVFDQQRWEHGHQLHG7KHUHJLRQPXVWPRYHIRUZDUGLQDGGUHVVLQJ
QRWRQO\WKHFOLPDWHFKDQJHLVVXHEXWWKHIXWXUHVKRUWDJHRIFRQYHQWLRQDOHQHUJ\VRXUFHV'RLQJVRZLOO
OHDGWRDPRUHVXVWDLQDEOHGHYHORSPHQWSDWKDQGZLOOOLNHO\LQFUHDVHWKHFRPSHWLWLYHQHVVRIWKHUHJLRQ¶V
H[SRUWVLQWKHORQJWHUP
,W LV FOHDU WKDW WKH UHJLRQ QHHGV WR DWWUDFW PRUH IRUHLJQ GLUHFW LQYHVWPHQW DQG WHFKQRORJLFDO
SDUWQHUVKLSV WR VWLPXODWH LQQRYDWLRQ DQG UHGXFH WKH FDUERQLQWHQVLYH QDWXUH RI SURGXFWLRQ ZKLOH
PDLQWDLQLQJFRPSHWLWLYHQHVV7KLVLVLPSRUWDQWWRKHOSWKHUHJLRQPRYHWRZDUGVDQH[SRUWVWUXFWXUHWKDW
LV OHVV HQHUJ\LQWHQVLYH DQG ZLWK ORZHU HPLVVLRQV RI JUHHQKRXVH JDVVHV 0DQ\ FRXQWULHV LQ WKH UHJLRQ
KDYH FRPSHWLWLYH DGYDQWDJHV LQ SURGXFLQJ HQYLURQPHQWDOO\ IULHQGO\ SURGXFWV DQG LQYHVWPHQW DQG
LQQRYDWLRQFDQH[SDQGWKHVHDGYDQWDJHVDQGKHOSHVWDEOLVKNH\LQGXVWULHVDVZRUOGOHDGHUV
*RYHUQPHQWV LQ WKH UHJLRQV VKRXOG DOVR SURPRWH DQG HQFRXUDJH FRPSOLDQFH ZLWK WKH 7%7
$JUHHPHQW¶V &RGH RI *RRG 3UDFWLFH IRU WKH 3UHSDUDWLRQ $GRSWLRQ DQG $SSOLFDWLRQ RI 6WDQGDUGV
LQFOXGLQJ E\ LQFUHDVLQJ WUDQVSDUHQF\ DERXW QHZ LQLWLDWLYHV $ OHJDO VWUXFWXUH LV QHHGHG WR HQVXUH WKDW
VXFKYROXQWDU\SULYDWHODEHOVGRQRWUHVXOWLQXQZDUUDQWHGEDUULHUVWRWUDGH
%H\RQGUHDFWLQJWRQHZUHTXLUHPHQWVLQH[SRUWPDUNHWVWKHUHJLRQPXVWHQFRXUDJHDPXOWLODWHUDO
DJUHHPHQW WKDW HQVXUHV D OHYHO SOD\LQJ ILHOG IRU WKH UHJLRQ¶V SURGXFHUV 2QJRLQJ QHJRWLDWLRQV DUH
FRPSOH[LQSDUWEHFDXVHRIWKHQHHGWROLQNQHZUHTXLUHPHQWVDQGLQFHQWLYHVZLWKILQDQFLDODVVLVWDQFH
DQGWHFKQRORJLFDOWUDQVIHU,QWHUPVRIGRPHVWLFSROLFLHVFRXQWULHVLQ/DWLQ$PHULFDDQGWKH&DULEEHDQ
PXVW LQFRUSRUDWHWKHLVVXHRIFOLPDWHFKDQJHDQGHQYLURQPHQWDOVXVWDLQDELOLW\LQQDWLRQDODQGUHJLRQDO
GHYHORSPHQWVWUDWHJLHV
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
%LEOLRJUDSK\
$'(0( ³%LODQ &DUERQH 3UHVHQWDWLRQ RI WKH PHWKRG´ >SDJH
LQWHUQHW@
KWWSZZZDGHPHIUVHUYOHW.%DVH6KRZ"VRUW FLG P FDWLG !>GDWHRIUHIHUHQFH0D\@
$QFKDUD]9LQD\H'H\DQG5LDG$6XOWDQ³$LGIRU7UDGHDQG&OLPDWH
&KDQJH )LQDQFLQJ 0HFKDQLVPV %HVW 3UDFWLFHV DQG /HVVRQV /HDUQHG IRU
/'&V DQG 69(V LQ $IULFD´ ,&76' 3URJUDPPH RQ &RPSHWLWLYHQHVV DQG
6XVWDLQDEOH 'HYHORSPHQW 1R *HQHYD 6ZLW]HUODQG ,QWHUQDWLRQDO
&HQWUHIRU7UDGHDQG6XVWDLQDEOH'HYHORSPHQW-DQXDU\
%DOO-HIIUH\³6L[3URGXFWV6L[&DUERQ)RRWSULQWV´ZVMFRP0DUFK
%ODQGIRUG'DQG7-RVOLQJ*UHHQKRXVH*DV5HGXFWLRQ3ROLFLHVDQG
$JULFXOWXUH ,PSOLFDWLRQV IRU 3URGXFWLRQ ,QFHQWLYHV DQG ,QWHUQDWLRQDO
7UDGH'LVFLSOLQHV,&76'±,3&3ODWIRUPRQ&OLPDWH&KDQJH$JULFXOWXUH
DQG7UDGH,VVXH
'HU%ODXH(QJHO³7KH%OXH$QJHO±(FR/DEHOZLWK%UDQG&KDUDFWHU_
'HU %ODXH (QJHO´ >RQOLQH@ KWWSZZZEODXHUHQJHOGHHQEODXHU
BHQJHOLQGH[SKS!>GDWHRIUHIHUHQFH0D\@
%ROZLJ 6LPRQ DQG 3HWHU *LEERQ ³(PHUJLQJ SURGXFW FDUERQ IRRWSULQW
VWDQGDUGV DQG VFKHPHV DQG WKHLU SRVVLEOH WUDGH LPSDFWV´ 2(&' -RLQW
:RUNLQJ3DUW\RQ7UDGHDQG(QYLURQPHQW7UDGHDQG$JULFXOWXUH1RYHPEHU
%UHQWRQ 3DXO *DUHWK (GZDUGV-RQHV DQG 0LFKDHO )ULLV -HQVHQ ³&DUERQ /DEHOOLQJ DQG /RZ,QFRPH &RXQWU\ ([SRUWV $ 5HYLHZ RI WKH
'HYHORSPHQW,VVXHV´'HYHORSPHQW3ROLF\5HYLHZYRO1R0D\
BBB ³&DUERQ /DEHOOLQJ DQG /RZ ,QFRPH &RXQWU\ ([SRUWV $Q ,VVXHV
3DSHU´8QLYHUVLW\/LEUDU\RI0XQLFK*HUPDQ\0D\
%ULWLVK 6WDQGDUGV ,QVWLWXWH ³3$6 5HODWHG ,QLWLDWLYHV´ %ULWLVK
6WDQGDUGV,QVWLWXWH>RQOLQH@KWWSZZZEVLJURXSFRPHQ6WDQGDUGVDQG
3XEOLFDWLRQV+RZZHFDQKHOS\RX3URIHVVLRQDO6WDQGDUGV6HUYLFH3$6
5HODWHG,QLWLDWLYHV!>GDWHRIUHIHUHQFH$SULO@
BBB³6SHFLILFDWLRQ IRUWKHDVVHVVPHQWRIWKHOLIHF\FOHJUHHQKRXVHJDV
HPLVVLRQVRIJRRGVDQGVHUYLFHV´
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
%URZQ -HVVLFD 1LFROD &DQWRUH DQG 'LUN :LOOHP WH 9HOGH ³&OLPDWH ILQDQFLQJ DQG 'HYHORSPHQW
)ULHQGVRUIRHV"´2YHUVHDV'HYHORSPHQW,QVWLWXWH-DQXDU\
&DUERQ7UXVW³*UHHQ([SHFWDWLRQVFRQVXPHUVVWLOOZDQWWREX\JUHHQEXWH[SHFWHYLGHQFHRIDFWLRQ´
&DUERQ 7UXVW >RQOLQH@ KWWSZZZFDUERQWUXVWFRXNQHZVQHZVSUHVVFHQWUH3DJHVJUHHQ
H[SHFWDWLRQVDVS[!>GDWHRIUHIHUHQFH6HSWHPEHU@
&KL.HOO\ 5DH-DPHV0DF*UHJRUDQG5LFKDUG.LQJ³)DLU0LOHV 5HFKDUWLQJWKHIRRG PLOHV PDS´
%LJ,GHDVLQ'HYHORSPHQW,QWO,QVWIRU(QYLURQPHQW
&RQVXPHU (OHFWURQLFV $VVRFLDWLRQ ³&RQVXPHU 'HVLUH IRU µ*UHHQ¶ (OHFWURQLFV RQ WKH 5LVH 6D\V
&($´ &RQVXPHU (OHFWURQLFV $VVRFLDWLRQ >RQOLQH@ KWWSZZZFHRUJ3UHVV&XUUHQW1HZVSUHVVB
UHOHDVHBGHWDLODVS"LG !>GDWHRIUHIHUHQFH6HSWHPEHU@
&RWWLHU 7KRPDV 2OJD 1DUWRYD DQG 6DGHT = %LJGHOL ,QWHUQDWLRQDO 7UDGH 5HJXODWLRQ DQG WKH
0LWLJDWLRQRI&OLPDWH&KDQJH&DPEULGJH8QLYHUVLW\3UHVV6HSWHPEHU
'RQRVR *XLOOHUPR ³/D YXOQHUDELOLGDG GHO FRPHUFLR LQWHUQDFLRQDO IUHQWH D OD KXHOOD GH FDUERQR´
GRFXPHQWSUHVHQWHGLQ/DYXOQHUDELOLGDGGHOFRPHUFLRLQWHUQDFLRQDOIUHQWHDODKXHOODGHFDUERQR
(&/$&/DWLQ$PHULFDDQGWKH&DULEEHDQLQWKH:RUOG(FRQRP\&ULVLVDQGRSSRUWXQLWLHV
IRUUHJLRQDOFRRSHUDWLRQ/&*36DQWLDJR(&/$&'HFHPEHU8QLWHG1DWLRQVSXEOLFDWLRQVDOHV
1R(,,*
BBB /DWLQ $PHULFD DQG WKH &DULEEHDQ LQ WKH :RUOG (FRQRP\ 7UHQGV /&*3
6DQWLDJR&KLOH(&/$&'HFHPEHU8QLWHG1DWLRQVSXEOLFDWLRQVDOHV1R(,,*
(UQVW <RXQJ DQG 4XDQWLV ³3URGXFW &DUERQ )RRWSULQWLQJ ± D VWXG\ RQ PHWKRGRORJLHV DQG
LQLWLDWLYHV´-XO\
)UHQFK 1DWLRQDO $VVHPEO\ /2, QR GX MXLOOHW SRUWDQW HQJDJHPHQW QDWLRQDO SRXU
O¶HQYLURQQHPHQW-XO\
/H*RII)UDQFRLV³:RUNLQJWRJHWKHURQSURGXFWV¶FDUERQIRRWSULQW´(QGV(XURSH0D\
*UHHQKRXVH *DV 3URWRFRO ,QLWLDWLYH ³$ERXW WKH *+* 3URWRFRO´ >RQOLQH@ KWWSZZZJKJSURWRFRO
RUJDERXWJKJS!>GDWHRIUHIHUHQFH0DUFK@
+DPZH\ 5REHUW ³(QYLURQPHQWDO *RRGV :KHUH 'R WKH '\QDPLF 7UDGH 2SSRUWXQLWLHV IRU
'HYHORSLQJ&RXQWULHV/LH"´:RUNLQJ3DSHUV&HQWUHIRU(FRQRPLFDQG(FRORJLFDO6WXGLHV'HFHPEHU
+RJDQ/DQG67KRUSH³,VVXHVLQIRRGPLOHVDQGFDUERQODEHOOLQJ´1R&DQEHUUD$XVWUDOLD'HFHPEHU
,1,$DQG'(80$1³+XHOOD'H&DUERQR(Q3URGXFWRV'H([SRUWDFLyQ $JURSHFXDULRV'H &KLOH´
,QVWLWXWRGH,QYHVWLJDFLRQHV$JURSHFXDULDVDQG6HUYLFLRVGH,QJHQLHUtD'(80$1/WGD0D\
-KD9HHQD³(QYLURQPHQWDO3ULRULWLHVDQG7UDGH3ROLF\IRU(QYLURQPHQWDO*RRGV$5HDOLW\&KHFN´,VVXH
3DSHU1R*HQHYD,QWHUQDWLRQDO&HQWUHIRU7UDGHDQG6XVWDLQDEOH'HYHORSPHQW,&76'6HSWHPEHU
/DP\3DVFDO³$FRQVHQVXDOLQWHUQDWLRQDODFFRUGRQFOLPDWHFKDQJHLVQHHGHG´GRFXPHQWSUHVHQWHG
LQ7HPSRUDU\&RPPLWWHHRQ&OLPDWH&KDQJH
/RZ 3DWULFN DQG $OH[DQGHU <HDWV ³'R µ'LUW\¶ ,QGXVWULHV 0LJUDWH"´ ,QWHUQDWLRQDO 7UDGH DQG WKH
(QYLURQPHQW:RUOG%DQN'LVFXVVLRQ3DSHUV:RUOG%DQN
/RZ 3DWULFN *DEULHOOH 0DUFHDX DQG -XOLD 5HLQDXG ³7KH ,QWHUIDFH %HWZHHQ WKH 7UDGH DQG &OLPDWH
&KDQJH 5HJLPHV 6FRSLQJ WKH ,VVXHV´ 6WDII :RUNLQJ 3DSHU 1R (56' :RUOG 7UDGH
2UJDQL]DWLRQ-DQXDU\
0DF*UHJRU -DPHV ³&DUERQ &RQFHUQV +RZ 6WDQGDUGV $QG /DEHOOLQJ ,QLWLDWLYHV 0XVW 1RW /LPLW
$JULFXOWXUDO 7UDGH )URP 'HYHORSLQJ &RXQWULHV´ $JULFXOWXUH DQG 7UDGH 6HULHV ,VVXH %ULHI 1R *HQHYD,QWHUQDWLRQDO&HQWUHIRU7UDGHDQG6XVWDLQDEOH'HYHORSPHQW,&76'0D\
0DWWKHZV6FRWW&KULV7+HQGULFNVRQDQG&KULVWRSKHU/:HEHU³7KHLPSRUWDQFHRIFDUERQIRRWSULQW
HVWLPDWLRQERXQGDULHV´(QYLURQPHQWDO6FLHQFH7HFKQRORJ\YRO1R$XJXVW
0LQLVWU\ RI )RUHLJQ $IIDLUV 7UDGH DQG 1HZ =HDODQG 7UDGH (QWHUSULVH D ³7DLZDQ $SULO 4XDUWHUO\5HSRUW´6XVWDLQDELOLW\0DUNHW,QWHOOLJHQFH0LQLVWU\RI)RUHLJQ$IIDLUV7UDGH$SULO
BBBE ³,WDO\ $SULO 4XDUWHUO\ 5HSRUW´ 6XVWDLQDELOLW\ 0DUNHW ,QWHOOLJHQFH 0LQLVWU\ RI )RUHLJQ
$IIDLUV7UDGH$SULO
BBBF ³7DLZDQ -DQXDU\ 4XDUWHUO\ 5HSRUW´ 6XVWDLQDELOLW\ 0DUNHW ,QWHOOLJHQFH 0LQLVWU\ RI
)RUHLJQ$IIDLUV7UDGH-DQXDU\
0LQWHO ³$UH $PHULFDQV ZLOOLQJ WR SD\ PRUH JUHHQ WR JHW PRUH JUHHQ"´ 0LQWHO >RQOLQH@
KWWSZZZPLQWHOFRPSUHVVFHQWUHSUHVVUHOHDVHVDUHDPHULFDQVZLOOLQJWRSD\PRUHJUHHQWRJHW
PRUHJUHHQ!>GDWHRIUHIHUHQFH6HSWHPEHU@
0RVLHU$5³1LWURXVR[LGHHPLVVLRQVIURPDJULFXOWXUDOVRLOV´1XWULHQW&\FOLQJLQ$JURHFRV\VWHPV
YRO1R2FWREHU
ECLAC-S
e
r
i
eCom
e
r
c
ioin
t
e
r
n
a
c
io
n
a
lN
°10
7
T
h
en
ewe
r
ao
fc
a
r
bo
na
c
co
u
n
t
ing
:i
s
s
u
e
sa
ndim
p
l
i
c
a
t
io
n
s…
Mu
r
i
l
lo
,D
av
idR
om
o(2007
)
,“L
acom
p
e
t
i
t
iv
id
adex
po
r
t
ad
o
r
ad
elo
ss
e
c
to
r
e
sam
b
i
en
t
a
lm
en
t
es
en
s
ib
l
e
syl
a
c
on
s
t
ru
c
c
iónd
eu
np
a
t
rónexpo
r
t
ado
rs
o
s
t
en
ib
l
een Am
é
r
i
c
aL
a
t
in
aye
lC
a
r
ib
e
”(LC
/W
.148
)
,CEPALN
a
c
ion
e
sUn
id
a
s
,Ju
ly
.
Oy
h
an
t
c
ab
a
l
,W
a
l
t
e
r(2010
)
,“L
av
u
ln
e
r
ab
i
l
id
add
e
lcom
e
r
c
ioin
t
e
rn
a
c
ion
a
lf
r
en
t
eal
ah
u
e
l
l
ad
ec
a
rbon
o
:¿qu
é
h
a
c
eU
rugu
aya
lr
e
s
p
e
c
to
?
,
”do
cum
en
tp
r
e
s
en
t
edinL
av
u
ln
e
r
ab
i
l
id
add
e
lcom
e
r
c
ioin
t
e
rn
a
c
ion
a
lf
r
en
t
ea
l
ah
u
e
l
l
ad
ec
a
rbon
o
.
P
l
a
s
sm
ann
,K
.e
ta
l
.(
201
0
)
,“M
e
th
odo
log
i
c
a
lcom
p
l
ex
i
t
i
e
so
fp
rodu
c
tc
a
rb
onf
oo
tp
r
i
n
t
in
g
:as
en
s
i
t
iv
i
ty
an
a
ly
s
i
so
fk
eyv
a
r
i
ab
l
e
sinad
ev
e
lop
in
gcoun
t
rycon
t
ex
t
,
”En
v
i
ronm
en
t
a
lS
c
i
en
c
e &Po
l
i
cy
,M
ay
.
Po
r
t
e
r
,G
a
r
e
the
ta
l
.(20
08
)
,“N
ewF
in
an
c
ef
o
rC
l
im
a
t
eCh
an
g
ean
dth
eEnv
i
ronm
en
t
,
”Ov
e
r
s
e
a
sD
ev
e
lopm
en
t
In
s
t
i
tu
t
e
,Ju
ly
.
S
aun
d
e
r
s
,C
.
,A
.B
a
rb
e
ran
dL
. CS
o
r
en
s
on(2009
)
,“F
ood M
i
l
e
s
,C
a
rbonF
oo
tp
r
in
t
ingan
dth
e
i
rpo
t
en
t
i
a
l
im
p
a
c
tont
r
ad
e
,
”A
u
s
t
r
a
l
i
an A
g
r
i
cu
l
tu
r
a
lan
dR
e
s
ou
r
c
eE
con
om
i
c
sS
o
c
i
e
ty
,2009 C
o
n
f
e
r
en
c
e(53
rd
)
,
F
eb
ru
a
ry
,pg
.11–13
.
S
aun
d
e
r
s
,C
.
,A
.B
a
rb
e
ran
dG
.T
ay
lo
r(2006
)
,“F
ood m
i
l
e
s
com
p
a
r
a
t
iv
een
e
rgy
/
em
i
s
s
ion
sp
e
r
f
o
rm
an
c
eo
f
N
ewZ
e
a
l
an
d
’
sag
r
i
cu
l
tu
r
ein
du
s
t
ry
,
”No
.285
,L
in
co
lnUn
iv
e
r
s
i
ty
,Ju
ly
.
S
ing
apo
r
e Gov
e
rnm
en
t(2010
)
,“SECan
dS
IMT
e
chtod
ev
e
lopS
in
g
apo
r
eC
a
rbon L
ab
e
l
;h
e
lp m
ak
elow
c
a
rbonS
ing
apo
r
ear
e
a
l
i
tyan
dboo
s
tS
ing
apo
r
eex
po
r
t
scom
p
e
t
i
t
iv
en
e
s
sg
lob
a
l
ly
,
” SGP
r
e
s
sC
en
t
e
r
,
[g
ov
e
rnm
en
t m
ed
i
ar
e
l
e
a
s
e
s
] <h
t
tp
:
/
/www
.n
ew
s
.g
ov
.
s
g
/pu
b
l
i
c
/
sg
p
c
/
en
/m
ed
i
a_
r
e
l
e
a
s
e
s
/
ag
en
c
i
e
s
/
a
s
t
a
r
/
p
r
e
s
s
_
r
e
l
e
a
s
e
/P
201005
18
2
.h
tm
l>[d
a
t
eo
fr
e
f
e
r
en
c
e
:24 M
ay2010
]
.
T
e
i
s
l
,M
a
r
ioF
.
,B
r
i
an R
o
ea
n
dR
ob
e
r
tL
.H
i
ck
s(2002
)
,“C
anE
co
-L
ab
e
l
sTu
n
ea M
a
rk
e
t
?Ev
id
en
c
ef
rom
Do
lph
in
-S
a
f
eL
ab
e
l
ing
,
”Jou
rn
a
lo
fEnv
i
ronm
en
t
a
lE
con
om
i
c
san
dM
an
ag
em
en
t
,v
o
l
.43
,No
.3
,M
ay
.
THEMA
1(20
10
)
,“P
rodu
c
tC
a
rbonF
oo
tp
r
in
t »C
o
rpo
r
a
t
ep
a
r
tn
e
r
s »Ov
e
rv
i
ew
,
”[on
l
in
e
]<h
t
tp
:
/
/www
.p
c
f
p
ro
j
e
c
t
.d
e
/m
a
in
/
co
rpo
r
a
t
e
p
a
r
tn
e
r
s
/ov
e
rv
i
ew
/>[d
a
t
eo
fr
e
f
e
r
en
c
e
:31 M
ay2010
]
.
UKC
ab
in
e
tO
f
f
i
c
e(2008
)
,“F
ood M
a
t
t
e
r
s
:Tow
a
rd
saS
t
r
a
t
egyf
o
rth
e21
s
tC
en
tu
ry
.
”
UNCTAD(2010
)
,T
r
a
d
ean
dEn
v
i
ronm
en
tR
ev
i
ew2009
/2010(E
.
09
.
I
I
.D
.21
)
,G
en
ev
a
,UNCTAD
.
UNFCCC(2009
)
,“F
r
am
ew
o
rkC
onv
en
t
iononC
l
im
a
t
eC
h
an
g
e
.
”
W
eb
e
r
,C
h
r
i
s
toph
e
rL
.an
dH
.S
co
t
tM
a
t
th
ew
s(2008
)
,“F
ood
-M
i
l
e
san
dth
eR
e
l
a
t
iv
eC
l
im
a
t
eIm
p
a
c
t
so
fF
ood
C
h
o
i
c
e
sinth
eUn
i
t
edS
t
a
t
e
s
,
”En
v
i
ronm
en
t
a
lS
c
i
en
c
e &T
e
ch
n
o
logy
,v
o
l
.42
,No
.10
,M
ay1
.
W
e
id
em
a
, Bo P
.e
ta
l
.(
200
8
)
,“C
a
rbon F
oo
tp
r
in
t
: AC
a
t
a
ly
s
tf
o
rL
i
f
e Cy
c
l
eA
s
s
e
s
sm
en
t
?
,
”J
ou
rn
a
lo
f
In
du
s
t
r
i
a
lE
co
logy
,v
o
l
.12
,No
.1
.
W
i
edm
ann
, Th
om
a
se
ta
l
.(2007
)
,“Ex
am
in
ingth
eg
lob
a
len
v
i
ronm
en
t
a
lim
p
a
c
to
fr
eg
ion
a
lcon
s
um
p
t
ion
a
c
t
iv
i
t
i
e
s-P
a
r
t2
:R
ev
i
ewo
fin
pu
t
ou
tpu
tm
od
e
l
sf
o
rth
ea
s
s
e
s
sm
en
to
fenv
i
ronm
en
t
a
lim
p
a
c
t
sem
bod
i
ed
int
r
ad
e
,
”E
co
log
i
c
a
lE
con
om
i
c
s
,v
o
l
.61
,No
.1
,F
eb
ru
a
ry15
.
W
i
l
l
i
am
s
,A
.(2007
)
,“C
om
p
a
r
a
t
iv
es
tu
dyo
fcu
tro
s
e
sf
o
rth
eB
r
i
t
i
s
hm
a
rk
e
tp
rodu
c
edin K
eny
aan
dth
e
N
e
th
e
r
l
an
d
s
,
”C
r
an
f
i
e
ldUn
iv
e
r
s
i
ty
.
Wo
r
ld R
e
s
ou
r
c
e
s In
s
t
i
tu
t
e an
d B
ig R
oom In
c
. (2010
)
,“
2010 G
lob
a
lE
c
o
l
ab
e
l Mon
i
to
r
: Tow
a
rd
s
T
r
an
s
p
a
r
en
cy
.
”
WTO(
201
1
)
,“C
omm
i
t
t
e
e on T
r
ad
ean
d En
v
i
ronm
en
tin S
p
e
c
i
a
lS
e
s
s
ion
:R
epo
r
t byth
eC
h
a
i
rm
an
,
”
No
.TN
/TE
/
20
, WTO
,A
p
r
i
l
.
___
(
200
7
)
,“C
omm
i
t
t
e
eonT
r
ad
ean
dEnv
i
ronm
en
t-S
p
e
c
i
a
lS
e
s
s
ion-C
on
t
inu
ed Wo
rk Un
d
e
rP
a
r
ag
r
aph31
(
i
i
i
)o
fth
eDoh
aM
in
i
s
t
e
r
i
a
lD
e
c
l
a
r
a
t
ion
,
”No
.JOB
(
07
)
/5
4
, WTO
,A
p
r
i
l
.
Wy
n
en
,E
.an
dD
.V
an
z
e
t
t
i(2008
)
,“Noth
roug
hro
ad
:Th
el
im
i
t
a
t
ion
so
ff
ood m
i
l
e
s
.
”
Z
a
in
o
,C
a
i
t
l
in(2008
)
,“
ICTSD•S
t
i
ckys
t
i
ck
e
rs
i
tu
a
t
ion
:F
ood m
i
l
e
s
,c
a
rbonl
ab
e
l
l
ingan
dd
ev
e
lopm
en
t
,
”
ICTSD
In
t
e
rn
a
t
ion
a
lC
en
t
r
ef
o
rT
r
a
d
ean
dS
u
s
t
a
in
ab
l
eD
ev
e
lopm
en
t
,[on
l
in
e
] <h
t
tp
:
/
/
i
c
t
s
d
.o
rg
/
i
/n
ew
s
/
b
io
r
e
s
r
ev
i
ew
/12095
/>[
d
a
t
eo
fr
e
f
e
r
en
c
e
:31 M
ay2010
]
.
41
(&/$&6HULH&RPHUFLRLQWHUQDFLRQDO1ƒ
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQV«
6HULH
FRPHUFLRLQWHUQDFLRQDO
,VVXHVSXEOLVKHG
$FRPSOHWHOLVWDVZHOODVSGIILOHVDUHDYDLODEOHDW
ZZZHFODFRUJSXEOLFDFLRQHV
7KHQHZHUDRIFDUERQDFFRXQWLQJLVVXHVDQGLPSOLFDWLRQVIRU/DWLQ$PHULFDDQGWKH&DULEEHDQH[SRUWV0DUFHOR
/D)OHXU1HYLQ5RVDDVHQ/&/
7KH 7UDQV3DFLILF VWUDWHJLF HFRQRPLF SDUWQHUVKLS DJUHHPHQW D /DWLQ $PHULFDQ SHUVSHFWLYH 6HEDVWLiQ +HUUHURV
/&/36DOHV1R(,,*86
&DULEEHDQWUDGHDQGLQWHJUDWLRQWUHQGVDQGIXWXUHSURVSHFWV0DULH)UHFNOHWRQ1DQQR0XOGHU$QGUHD3HOODQGUD
(VWHEDQ3pUH]&DOGHQWH\/&/36DOHV1R(,,*86
%UD]LODQG,QGLDWZR%5,&VDVD³EXLOGLQJEORF´IRU6RXWK6RXWKFRRSHUDWLRQ0LNLR.XZD\DPD/&/3
6DOHV1R(,,*86
&ULVLV HFRQyPLFD \ FDPELR FOLPiWLFR DOJXQDV LPSOLFDQFLDV SDUD HO VLVWHPD PXOWLODWHUDO GH FRPHUFLR 6HEDVWLiQ
+HUUHURV/&36DOHV1R6,,*86
3ULYDWHSXEOLF DOOLDQFHV IRU H[SRUW GHYHORSPHQW WKH .RUHDQ FDVH <RR 6RR +RQJ /&3 6DOHV 1R
(,,*86
•
5HDGHUVZLVKLQJWRREWDLQWKHOLVWHGLVVXHVFDQGRVRE\ZULWLQJWR'LVWULEXWLRQ8QLW(&/$&&DVLOOD'6DQWLDJR&KLOH)D[
(PDLOSXEOLFDWLRQV#FHSDORUJ
1DPH
$FWLYLW\
$GGUHVV
3RVWDOFRGHFLW\FRXQWU\
7HO)D[(PDLO